Gnerally speaking, I agree with Paul's thrust but he repeats a canard that many in web programming seem to be rather keen on.
It now seems inevitable that applications will live on the web—not just email, but everything, right up to Photoshop.
Like many programmers and web-based techs, Paul Graham simply ignores the speed limitations of the web. No matter how fast my pipe gets, it is simply not going to be adequate to deliver Photoshop via the web. Why?
Quite simply, the size of the files makes it prohibitive. Yes, if you are working on web graphics as a resolution of 72 dpi (dots per inch), then your file may be a couple of megabyte (MB) and you could probably work over the web.
But the trouble is that far too many people forget about the sheer size of print files, which need to be created at 300 dpi and at the correct physical size. The standard file size of a 300 dpi A4 TIFF is about 16MB. Yes, you can reduce this through sending files as PDFs or, if it is suitable, using vectors but that is to forget that the raw files—the ones, in other words, that you will be working on in Photoshop—are likely to be far larger than this.
As someone whose art involves a lot of multi-layered photo images, I routinely work on files that are over a gigabyte (GB) in size. The last big print job that I did was a 10 foot by 7.5 foot display banner: the raw, multi-layered Photoshop file was a little over 3.5GB.
There is simply no way that these kinds of sizes are going to be used over the web. My spanky new Mac is pretty fucking fast but, at these sizes, even working locally (i.e. on the main hard drive) it simply isn't anywhere near instantaneous; the idea of working on such giant files over the web appalls me.
Sometimes, one can only conclude that these Web 2.0 visionaries predicting the death of the desktop need to actually research outside their own rather tiny sphere.
It may be that print will become less important but it will never die; and whilst that is the case, Photoshop will remain on the desktop. As will the professional users.