ISPs? Who mentioned ISPs?
You may not see much spam in your inbox, but the sheer cost of providing the horsepower to keep it that way is making mail provision a losing proposition for many ISPs (Most of whom I wouldn't trust with my email anyway).
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ISPs? Pah! Never use my ISP's email, too unreliable, but then many ISPs are tending to use Yahoo! mail or Google's gmail nowadays rather than their own servers, so another reason to avoid using them. For example, British Telecom already use branded Yahoo! mail and Virgin Media (cable) are migrating all users over to branded (virgin) gmail. All webmail accounts, but with POP3 access. I think this massively reduces the costs to the ISP...and nearly all will follow as far as I can see.
But stuff the ISPs, there are many, many excellent and inexpensive hosting services out there to choose from, and many provide email only services, POP3 packages that cost very little, etc. so I don't think it is as cut and dry as you like to think. Furthermore, for a couple of quid a year you can simply register your own domain name and for a few pennies extra some registrars will even supply you with a POP3 mailbox with webmail access...or use their totally free forwarding services.
Email isn't the problem, it is people not wanting to pay for something they can get for free...or rather, people don't want to pay for something they could easily live without. So I wonder how many FB and Twitter devotees would pay £15 per year for their accounts?
Email will 'grow up' like everything else, granted, but it won't be going anywhere soon. I think the next phase of email client development is instant messaging incorporated...and any other protocols that can be crammed in to aid communication. As long as it isn't a completely centralised affair I don't care...stuff the living in the cloud crap.
Email is infinitely more useful that FB, Twitter, and the rest; and with a local email client I can carry my communications around with me on a USB stick and access my email without a connection. Can't do that if your email is stuck on a ruddy Yahoo or Google server.