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Microsoft's now planning to make Windows Vista and Office downloadable via their website - a good choice, likely spurred on by the vast number of other software distributable via the internet.
It's a good idea, but I think that it's quite probably piracy will become even worse if it's distributed with Internet. When a hard copy is sold, it's inevitable that many users will lose their product key. If they decide they're going to do a little cheating, and share it with friends, they can't - unless they find that product key. If it's downloadable, the key is probably stored somewhere: perhaps in the "old archives" section of your email, or maybe you copied it to a file on your hard drive. In any case, it'll be much easier to copy it if users download it. Not to say there's any copy-protection on these CDs other than product key validation, but that actually stops quite a few.
People will also need high speed internet, and a reliable connection, but the vista customer preview program tested the system in terms of download managers etc, and it was really successful.
Another few things I can see coming: Microsoft offering all (or nearly all) of their products via internet. Hey, lazy computer users don't want to have to go to PC World lol!
Also, selling Vista with Internet could give Microsoft an edge over Apple's Leopard in the next-gen OS war. If it's successful in this regards, don't be surprised if Apple follows suit.