> Do you get the sense that everyone in the web world knows that desktop apps aren't going anywhere?
When I worked at a company doing enterprise financial software, I got the distinct impression that it was virtually impossible to sell a new desktop app. Our customers wanted everything to be web-based. I was hired as a desktop app developer and got switched over to web development after 8 months because all our new products were web-based.
I suspect that we'll see something similar to what happened with PCs and mainframes. The PC didn't kill the mainframe - all the old apps that used to run on mainframes still ran on mainframes. However, all new software, the category-killers that created new markets, were all developed on the PC. Mainframes stuck around for years before finally being killed by Y2K and web-based intranet apps, and some are still working.
Similarly, I think any attempt to displace office suites and such on the web is a losing battle. PC-based apps are "good enough" for what they're used for. But virtually all new killer apps, the ones with exciting market opportunities, will be on the web. Or they'll be web/desktop hybrids like DropBox, RescueTime, or BitTorrent, in cases where the app needs some local data that the browser can't provide.
Then PC apps will finally be killed by whatever new thick client ends up replacing the web, but we've got a while (maybe 10-20 years) before that happens.