Ten years ago I built a music player out of a PC and other stuff that was 4U big, cost thousands (if I used new parts) and could hold as many songs as my cigarette-pack sized iPod can store today for a few hundred bucks.
Thanks to Moore's Law, just about any thing you build today can be done on something the size of an iPod, you just have to wait long enough. What year will an entire SAP deployment be the size of an iPod? What year will an entire service like gmail be the size of an iPod? What year will a PeopleSoft installation be the size of an iPod? An entire Remedy helpdesk ticket system iPod?
In that year... will someone want to pay $millions for an equivalent PeopleSoft installation when it is on an iPod? I doubt it. Would PeopleSoft be able to stay in business selling an iPod-priced device? I doubt it. So will this kind of innovation come from an outside competitor? I'd assume so... just like phone companies couldn't make the leap to VoIP and were instead put out of business by the likes of Cisco.
I wonder if prior to complete (for example) PeopleSoft iPods, there will be a generation of single-function bricks that are connected via standard interfaces. You buy a database brick, a core IT services (DNS, authentication, ActiveDir/LDAP) brick, and a PeopleSoft app brick; and they provide the service together. Sort of like legos.
What app will be on your brick?