IBM builds 120 petabyte cluster out of 200,000 hard drives

I think the future is in the cloud. I just recently got a new laptop with a 750GB HD and I thought to myself "How am I ever going to fill this thing?" Other than my music collection pretty much everything else that I do is or can be web-based.

Maybe Larry Ellison was right about thin clients/NCs, just way too early.

Possibly. Commodity storage has multiplied by more than the order of a thousand in the last 30 years (from less than 1Mb on floppies, around the 100K or 200K mark each IIRC with a person owning just a few, to a 2Tb drive being affordable). As SSDs progressively replace spinning disks the size of such a device will not be an issue, and we'll find ways to make use of the space easily (wall-size TVs playing uncompressed high-DPI high-framerate video? Whole-life recording?).

It depends if the exponential improvement in storage or chip technologies will stop before it's possible.

If we look at history , there were many exponentially improving technologies(for example speed of flight or height of buildings). But the trend stopped when it became to expensive to continue developing the technology.There is also a case to be made for physical barriers to a technology.

With chip manufacturing plants costing $3 billion , and only 3 chip leading edge manufacturers still operating today, and the element size of modern chips is a few atoms (and element size of an atom seems like a hard natural barrier), you could see moore's law stopping.

And even if we can build this storage device, will people want it in 2040 ?

At this kind of scale, you would probably just let disks fail which eventually would kill off entire logical modules, and simultaneously keep adding new modules to supplement them. So replacing the drives has no real urgency.