Even if you were 100% correct, hard drives aren't going anywhere. Browser cache is around 1GB and web developers are itching for vast landscapes of local storage systems.
And where do you expect the operating system and marvelous web stack where all these things are created to reside? Burned in EEPROM?
I think the consumer already can't really differentiate between what is local or over the internet, they don't know what a browser is by and large.
But if what you say is right, the pendulum, at the consumer level, will soon swing back the other way the first time that someone can't access the "cloud" on a trip or forgets to pay their "cloud access bill" (phone/internet whatever) and then gets locked out of ... well, everything.
Castrating the device and agitating the users by making everything Microsoft Palladium style will continue to be a bad idea. Remember Sun's motto, "The network is the computer"?
Nah, don't think so; the computer is the computer. Networks are pretty important, but they do not replace everything, they are fundamentally not reliable, responsive, or resilient enough to.
And every time a step is made in any of those directions, it's done because some machine or some network, somewhere else, is better off. That rising tide will lift all boats, keeping the consumer devices edging ahead; that is unless, you are harking back to the "give consumers bare minimum craptaculous cloud terminals".
That's been tried about every 3 months for the past 35 years or so and has never gone well.