My PC went dark last week. I felt sick thinking about re-installing all the applications on it (my data is backed up to a DVD every night). Not just re-installing, but getting all the updates and security patches in place. Fortunately, Windows XP Pro System Recovery let me recover and I didn't have to rebuild. But web applications look better and better when I think about installing software and keeping my PC secure from internet vermin.
A recent Computerworld article states that laptops will soon replace the desktop as the preferred business PC, citing mobility as the main reason for this trend. Microsoft office products - and increasingly OpenOffice and other open source desktop programs - will continue to be used on both laptop and desktop PCs for the forseeable future. The reason is the advanced and wide ranging functionality they offer, together with perceived stability in an office environment.
However I do think that long-term, the writing is on the wall for desktop office applications. Once the current crop of alpha and beta web-based office products reach a level of maturity, they will be ready to challenge Microsoft for the minds and pockets of consumers. One of the keys is achieving the level of functionality that Microsoft Office undeniably has. But there are also issues of online security and reliability that web-based apps will need to address, in time. Office apps are just too important to corporate productivity for CIOs and IT managers to entrust their businesses with web-based apps, without complete confidence in their functionality (ability to do the job efficiently) and performance (security and uptime).