The OS is Dead, Long Live the Hypervisor
The implications of such virtualization are enormous. For one, you would be able to run multiple operating systems on your desktop. Perhaps you have wanted to try the free version of Pro Tools that only runs on Windows 98 or would love to add a light Linux-based CAD program like CADvas to your system. No problem. The operating systems will not interfere with each other or the applications.
... In this paradigm, the OS could not be less important except as a tool to run the applications you need.
The article discusses using hypervisors as a replacement for the operating system, and application-specific VMs as opposed to the hassle of maintaining software on a single system. I've certainly been thinking about this for a few years, probably due to the fact
that I have to work with so many different server platforms, and virtualization has enabled me to do this without requiring the sysadmin skills that would otherwise be necessary. (Ah, laziness).
It's interesting to consider how software would be packaged and delivered in a world like this: what software/etc becomes possible if installation, versioning, conflicts, etc goes away, and you essentially just sit down in front of a machine (with your old data, of course) dedicated to just that task or set of tasks.
Lot's of digerati talk about the novelty of your data being in the cloud and untethered to an actual physical location. I think it gets much more interesting when you couple that with the idea that the machine or v-machines you do your work on would also live in the cloud. They could follow you around either via remote access or by synchronizing big files -- both problems for which pretty mature solutions exist. Your data then doesn't have to leave your house if for security or privacy reasons you don't want it to. Executing as an ASP could be reduced to simply maintaining a VM for download or rsync by your customers, instead of dealing with server farms, deployment etc.
Issues exist, like security/viruses, desktop integration, customization, etc, but since the vm-vs-single-host paradigms aren't mutually exclusive (in fact they're complementary to a degree almost never seen by disruptive tech) I don't see any of the issues slowing the momentum towards a hypervisor world.