Desktop virtualization picks up the pace
Analyst Brian Madden identifies desktop virtualization as a major 2008 virtualization theme:
If you could sum up the year with a single theme, that theme would be "desktop virtualization is here to stay." I don't want to go so far as to say that desktop virtualization is mainstream, but 2008 saw Microsoft, VMware, and Symantec getting serious about it, and Citrix fighting to keep the lead (it'd) established via XenApp over the past decade.
I concur.
"Desktop virtualization" isn't a single thing; it's really a shorthand for a variety of approaches, the common thread of which is that they're not traditional Wintel "fat clients." And it dovetails with other technology approaches--such as rich Internet applications (RIA) and browser-based application access--that are only virtualization in the most conceptual sense.
I started seeing a swelling interest in alternative ways of delivering applications and software services to a variety of clients in 2007. But I agree with Madden that the trend accelerated in 2008, albeit at a measured pace often driven by security and compliance concerns more than return-on-investment arguments.
2008 saw Citrix rationalize its entire virtualization portfolio around the Xen nomenclature--breaking from its successful but narrow Presentation Server roots. And VMware's View announcement in December filled out a client-side portfolio that had been missing some major pieces previously.
Microsoft, meanwhile, rolled out Hyper-V and announced a new version of its application virtualization product. And systems vendors such as Dell, Hewlett-Packard, IBM, NEC, and Sun Microsystems also expanded or updated their offerings on the desktop side.
The desktop, as we've come to know it, has hardly gone away. New devices that depend on applications running in the network and data stored there tend to supplement, rather than replace, more traditional clients.
But some of our applications now usually reside in the network; we tend to regard an unconnected PC as a crippled thing. And that opens up a frame of mind that will move more and more "state" (whether applications, personal data, or other services) off local devices and into either corporate data centers or the cloud.
Gordon Haff is a principal IT adviser at Illuminata and has more than 20 years of IT industry experience. He writes about what's happening with enterprise servers and data centers, "Yotta-scale" computing, and related software and device trends as part of the CNET Blog Network. Disclosure. 
But the approach of running a fat OS like Windows and fat applications on a remote server and streaming it back and forth does suffer from high costs and latency - that's why we're trying a different approach to the desktop using all web apps at http://G.ho.st - I think it's very much in line with the trend you are talking about but a contrasting technical solution.
Zvi