can't say i'm convinced of the web-based future of applications myself. the idea strikes me as very mainframey. i'm sure the potential is there, but a rebirth of some sort might be necessary
in particular, i don't see the benefit of web-based apps vs traditional desktop ones. there's a few, such as the centralization of files, but they seem pretty negligible. it's possible web-based apps have been conceptually intermingled with web 2.0
either way, Microsoft isn't exactly sitting around, having just released Silverlight
This one is huge. Edit your files at any time from any computer. Your friends, co-workers and collaborators can edit the same documents, even at the same time from different places. With a single history of revisions. Backups taken care of for you (maybe you don't trust google on this but they probably do a better job backing up data than the majority of the computer using population).
This one thing alone changes the entire paradigm of document creation, sharing, etc.
in particular, i don't see the benefit of web-based apps vs traditional desktop ones. there's a few, such as the centralization of files, but they seem pretty negligible. it's possible web-based apps have been conceptually intermingled with web 2.0
either way, Microsoft isn't exactly sitting around, having just released Silverlight