...ask the audience which they'd rather give up - their browser, or all the rest of their desktop apps. (Unanimously, they'd all give up the latter without a blink.)
The mistake is thinking that the value users derive comes from the software, when it actually comes from the information. The web's power comes from simple connection to relevant information, from wherever you are. The web browser is mistakenly being credited for that, when in fact it is merely the primary tool, today, for providing access to the information. But don't be fooled, the value is in the information, and as that can be located locally in a private store as much as publicly on the Internet the web browser is not the final answer. Web 2.0 is about making the information seamlessly available to any application, browser or other, in order to maximally unlock its value. Web 2.0 is about software getting out of the way of information.
Give me applications that let me navigate the information I want, seamlessly, wherever that information is stored. Message to Yahoo/Google/MSN/...: I don't want my information services to work well only when I allow a single service provider to host all my personal data, yet that's the direction you guys are evolving.