Cloud computing is just re-centralization, with all the advantages and disadvantages of that.

As already mentioned, it's like electricity. You can have your own power plant (there's motion in that direction with regards to solar powered houses and such), or you can depend on someone else to provide power to you. (There's really interesting history on the point of a national power grid. One of the key reasons it exists is because Thomas Edison made a bigger profit off of it than off of localized power production, due to conflicts between his patents and Tesla's patents. Edison hired better thugs, so we have a national power grid. Not the whole story, but definitely a significant portion of it.)

There are plus/minus points to having your own servers, and different plus/minus points to paying someone else to do your servers for you.

As for the idea that packaged software will disappear, I can see that with commodity software, like word processing and spreadsheets, but there's going to still be a big market for local computing power when it comes to graphics-heavy gaming, or things like video editing, CGI, 3D rendering, CAD, et al. Those will still require local CPU/GPU power and big chunks of local RAM, for some time to come. The physical format they're presented in may change, but they'll still be needed for years if not decades.