I really think we’ll see a hybrid of the two for the foreseeable future, as there are many applications that still don’t run well over a network (video, audio and photo editing to name a few). As bandwidth increases and computing becomes ubiquitous, we’ll see more of a migration towards central management of applications and storage of data – the recent AJAX craze is just the beginning of this shift to utility computing.

We still have some issues such as privacy and security that must be solved before this becomes widely accepted by consumers.