An interesting data point supporting the "software + services" model...
Web-based computing has a small disadvantage: working with an online program like, say, Writely (now Google Docs) is slower than using one based on your own machine, since info must constantly go back and forth from a remote server.
It also has a huge disadvantage: when you're off line, you're out of luck. You can't get at your web-based mail, you can't get at your online calendar or contact list or documents, you can't do very much. Traveling in China, I spend a lot of time off-line, so for me this is a deal-breaker.
All of which is why, to me, the news that Google Calendar will sync with Microsoft Outlook is big news indeed.