On this year's Professional Developers Conference (PDC 2003) in Los Angeles, Microsoft presented a new installation technology code named "ClickOnce". It is not based on Windows Installer (MSI), but it also doesn't replace MSI.
From what I understand so far, ClickOnce is basically the fulfillment of Microsoft's promise of "XCopy Deployment" for .NET applications, with a friendly user interface.
ClickOnce is a set of functionality in the next version of Microsoft® Visual Studio® .NET (code name "Whidbey") and the Microsoft® .NET Framework. Extended support for ClickOnce will be included in the next version of Windows (code name "Longhorn").
ClickOnce applications can be deployed to a client machine from a Web location, a UNC share, or even from a file location such as a CD. Your application will run inside a security "sandbox", and ClickOnce installations cannot directly change the target machine configuration (except creating a shortcut on the Start menu).
If you need an install that impacts the client machine (to create file associations, install MSDE, or perform other similar actions) then you still have to handle that side of the installation through an .MSI file. Of course, everything you do outside of the regular ClickOnce deployment process can reduce the ClickOnce functionality. Also, the .NET Framework is required on the target machine.
MSDN Article about ClickOnce
Additional information will be posted on InstallSite soon.
InstallShield announced (and showcased on PDC) that their DevStudio tool will integrate in Visual Studio "Whidbey" and will support ClickOnce, allowing developers to customize ClickOnce deployments in several ways.
InstallShield Press Release
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Microsoft Announces New Installation Technology
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