Oh no! I am being held hostage by Microsoft! There are no other choices in operating systems. I cannot chose, for Microsoft is holding me hostage!

In my opinion, cloud based things will play a decent role in th future, but will not edge out full OS's in the near future.  What I do think we'll see is that the roles in which people use computers will be come more distant.  As you have web browsing taking more and more cycles on our desktops and laptops, that type of activity can be migrated to a cheap device (tablet, $300 laptop, whatever Google is tryng to sell).  But those activities can be bulleted down to a few dozen activities.  Word processing Spreasheets etc are the next wave of applications based on web infrastructure.  You save their data to their servers/storage devices.  What about the other activities?

I work in the industry and Im always suprised how people claim to be the future, but what about people that are programming?  Is there going to be a C compiler written by Google and ported to web form?  What if you want to encode some DVD's? 

It really takes a general purpose device and narrows your activities down a few dozen.  Granted I understand that those activities are the lion's share of time spent at a computer, but there are other uses out there. 

As a side note, a co-worker and I were discussing the use of the Cloud word.  It really comes down to this.. at some point, some marketing guy changed the word "internet" and interchanged it with "cloud".  We laughed at that simplified answer that is totally accurate.  Google and MS have been doing online email for years, they are just behind on the marketing flavor of th day.  If someone starts hurting for innovation, just replace web based with cloud and watch people react positivily.

There are certain things I will never put on a cloud. Simple as that. Though it is useful.