I was listing to the lectures for UC Berkeley's CS 169 (Software Engineering Course) off ITunes University, and I was a little surprised about the instructors vision of the future of computing.
They stated the belief that in 10 years, nearly all computing will done as a service. As such, the course focused exclusively on SaaS via agile development using ruby on rails.
The idea is that "shrink wrapped software", that is downloaded and installed on a machine, will die. All computing will be done by remote application servers, owned or rented by service providers. User will pay for subscriptions to services.
Users would no longer need personal computing power. Personal computers would be replaced by little more than network interfaces with displays. This would enable users to purchase really cheap hardware, but would lock them into paying monthly fees to use it.
It would solve a few problems in the software industry: pirating/DRM, users sticking comfortably with old software (steady predictable income).
Personally I think it's a little frightening. Firstly, it would be extremely difficult for a small time developer to run a successful SaaS setup without a very large amount of startup money. Second, the big guys already have the connections, infrastructure and code base to provide the masses with SaaS, and it would be extremely difficult to compete with that.
I think that certain types of software would work great as a service; mostly software that fulfills certain needs of businesses, especially stuff that requires large amounts of hardware/storage and maintenance.
I personally have some doubt that SaaS will one day completely dominate consumer software consumption. I wouldn't prefer it myself. It certainly wouldn't work well for all software needs.
I hate the idea of needing to be connected to the internet to use a piece of software. I hate the idea of my software being updated constantly without my consent, or knowledge of the changes made. I hate the idea of all my data being sent over a network. But, I can see how a lot of people could buy into. If you can't afford a real computer, but you can afford a cheap device that comes with a free trial period of services...