We should probably stop calling them "web browsers" at this point. We've basically re-implemented the idea of an Operating System in the browser, so we now have a full-fledged OS like Linux, BSD, Plan9, OS/2, Minix or whatever, being used to host a "poor man's OS" which is recreating most of what the base OS does!
To say "things have gone very wrong" is a dramatic understatement in many ways. I still think we messed up by migrating away from the mobile-code approach for apps. But I largely blame Sun for that, as they screwed the pooch by shipping the Consumer JRE about 7 years too late, ignoring needed features for doing desktop and interactive apps (like modern audio and video codecs, etc.) and didn't stay on top of JRE security. Now, Java, which was probably the best "mobile code" platform that ever got mainstream traction, is basically dead as a client platform. :-(
Browsers are great for doing what they were designed to do: Browsing hypermedia. But to shoehorn "remote application delivery" into the browser seems like a step sideways (at best) to me. We're layering hacks on top of hacks on top of hacks now, to try and recreate the "app" experience inside the browser. This strikes me as sub-optimal.
The people making games, applications, and lush webGL marketing demos are people who can throw lots of engineering resources at a problem until it does the thing they want it to do. Web dev has always been an insane mountain of hacks in order to get pages to render, but the attractive and democratic reasoning is that that extra effort is worth it if the maximum number of people can access the information. People on old computers, cheap smartphones, kindles, chumbys, whatever. The best computer is the one you have on you, that sort of thing. Access and ease-of-adoption are powerful things.
No amount of java applets would have ever made up for that.
I think that if we had known where we wanted to go, it may have been better to start the other direction, and make a web app API that basically allowed apps to contain documents. That would have avoided significant amounts of pain, and ended up looking more similar to what we have anyway -- web apps wanting or needing a larger and larger degree of extension-like autonomy and permission sharing with the browser.
The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.
So who knows, maybe somebody reads one of my rants one day and goes "Hey, this mindcrime guy has a point... and furthermore, I see a better way to do this" and takes some initiative. Who knows what might happen?
Now, are the odds of that infinitesimal? Probably, but that's OK. I ran for public office (and lost) as a Libertarian, so that tells you what I think about odds. :-)