If you look at the trend of computer power and processing over the decades, you'll notice that it has gone from large centralized systems (mainframes), to smaller (minis), even smaller (PCs), and to holy-smoke-that's-small (smart phones). This trend can be traced in telecommunications also. Around the time of the dot-com boom came P2P, which has started to show up in industries like car-rentals and room-rentals, which is kinda the end stage of the migration. Sun had a slogan for a while about "The Network is the Computer" and were trying to push their thin clients against the trend, and now Sun is part of Oracle, which isn't a happy ending. For Sun.

I think the answer to your question is this: the cloud can offer many things, but the trend is that the power moves to the edge, which means that the capabilities of the cloud will also move to the edge leaving a vacuum for something else its space. Don't bet on anything that goes against that trend.

I think the next question is: in light of the trend of power moving to the edge, what's the long term business plan for cloud resources? You'll have a gigacore CPU with a petabyte of storage in your laptop in 20 years. What will the cloud look like, and what will we use it for when we all have supercomputers in our smart phones?

Issue what does application disappearing mean? You still need a GUI or some kind of interface to work with -- which has to be provided by something in your hand, and not in the cloud. This means some amount of processing also needed on the front-end device -- PC, mobile, whatever. Subject to this, yes, most things may move behind the wall so that the job you do is not decided/constrained by the device you use.

It is impossible to have a view of what will be ten years away from now -- I guess this is your perspective -- if we stick to today applications (spreadsheets, for instance). My impression is that Ruben's gigacore CPU on the hand-held device will be mostly used for the user interface (use your imagination to see how in leisure, business and science environments), while inference/computation/knowledge will be hosted in the cloud. No way to have a LaTeX editor on your watch. One relevant fact is that there will be a further risk of lock in: not only hardware and software, but also a "cloud platform" lock in. A good reason to invest on standards ;-)