In an interview about the progress of .Net, Bill Gates talks about how Hotmail is an example of "software as a service" - and he's not talking about Hailstorm.

If software-as-a-service is going to anything like Hotmail I don't want it. Hotmail has less features, more ads, more intrusive Microsoft commercials and is of course slower than a 'real' email service. This is a good example of the whole "Let's force everything to port 80"/"We can just use the browser as interface" fallacy. What we need is a truly new renegotiation of the network/terminal interface. SOAP isn't it.

Not to sound too much like a Linux whiner, but I think the X-Terminal - with access to local data and processing resources is really a better way to start, than the opposite. Or one could study the Groove architecture to see if that cuts the cake. At least they have a notion of networked working space - enhanced with local resources to display and process data, AND with integration for server based services via a business integration server.