"Eh, the Cloud will become like electricity. One day we won't even think about it but it will be integral to daily life. "

That's what they said about flying cars and personal helicopters. Where's my flying car?

"Outages and breaches will occasionally happen but we will live with it."

Putting all our eggs in one basket is never a good idea. There will be more outages and more breaches on SaaS than for private client servers because it becomes a more bigger and viable target. Distributed systems unlike centralized systems like cloud are more difficult to bring down all at once.

"Software vendors like Microsoft won't even sell packaged software (even games) because it will all be SaaS. "

Service doesn't scale and never will. Saas will never beat packaged software in revenue because it has huge associated costs both for the provider (she has to pay for bandwidth and other expenses every month) and for the consumer (she has to pay every month compared to just once).