The main argument is that the computer is a productivity tool, speed is paramount and no program can go faster than it slowest link. With hardware prices dropping further, people will not want to give up the flexibility they have now for slow performance, weak administrative tools and poor data transfer capabilities - all criticisms of ASP systems. Reviews of Microsoft's Office Online, which went on preview at the beginning of November, were certainly mixed. Whilst the key issue is control and distribution of data some people fail to see what the fuss is about. ASP is a natural development on the same level as paying a phone company to supply communication facilities.
ASPs are after all only offering what thin clients have been providing for some time.
The key to its success will be setting expectation levels appropriately and the level of service provided. On the other hand, economies of scale may not be that big. Whatever your belief, there are still technical challenges and ASPs have relatively few customers so far. Broadband services are not available everywhere. Organizations will always require customization and integration of various applications.