I think they do, for a lot of things at least. There certainly are
some things that desktop users prefer in a browser (I see way more desktop users using Facebook in a browser than via a native app, even though native apps exist), but if I think of the apps that I see people using day-to-day, there's a
huge swath that aren't in a browser and it's not clear to me will be in the foreseeable future.
I mean, browser-based email has gotten really good... yet there are still a ton of people that use native email clients. Hell, I and lots of other people even use a native Twitter app on our computers - if there's anything that seems replaceable with an in-browser app, it's Twitter.
Replacement of many native office/productivity/image/media apps with in-browser apps seems a long way off to me. And it's not just because HTML doesn't yet fully provide rich/"native-feeling" capabilities, it's also that people don't want to run all their apps in rectangular browser tabs — maybe OSes will evolve to not be as app centric so that all of a user's in-browser apps won't be organized under a single icon in their dock/taskbar (though I wouldn't bet on it), but I don't see a lot of movement toward that. I wouldn't be shocked if 20 years from now everything's HTML, but it sure doesn't seem like it'll happen in the next 5.