Google is wrong insofar as folders apply to individual humans.

Folders work for an individual because of the vast amount of spatial processing power in the human brain. We are hardwired to put, get and find things. The spatial metaphor is useful because manipulation fits so easily into it. Even the notion of search itself is spatial.

On the other hand, classifying, categorizing and labeling things does not come as naturally. Imagine how odd it would be for a person to actually label their toothbrush, washcloth, and showercap "bathroom equipment" rather than simply placing them in the bathroom.

Although computers allow us to have the same thing in more than one place - e.g. a single file can be accessed via verbally different but logically identical references; this does not detract from the spatial metaphor, we still are able to apply the spatial metaphor of "the file is located here."

I would go further to suggest that Google's continuous SEO woes shows the problem with accessing information via tags rather than by placement whenever bad places with good tags rise to the top of results.

My theory is that the logic behind such claims is that you can effectively map all groups of folders' entries using tags derived from every file's original folder hierarchy, but representing all the possible groups of tagged files in a hierarchical folder system requires an incredibly fragile and complex system of symbolic links. Ignoring certain issues with converting folder names to tags (such as two identically-named folders nested in the same path and collisions between tag combinations whose paths are a different order of the same set of folder names), an ideal tagging system is as expressive as any hierarchical organization and it is capable of numerous additional ways to slice the data.

In practice, tagging systems seem to be limited by relatively immature interaction models relative to the far better explored nested structures. For example: for a given folder in the hierarchy there are often few enough children to allow easy recognition of a forgotten name whereas tags for non-empty subsets of a given set of files are hard to suggest meaningfully; nested folders demand more care beginning with the earliest placement of files but tagging makes wholly unsustainable conventions perfectly reasonable early on; sections of nested structures are easy to relocate to a new parent but changing the related set of tagged files to uniformly substitute comparable target labels for precisely those obsolete labels is difficult or impossible.

In short, there's a theoretical basis for replacing folders with tags, but the real-world adoption is severely hampered by grossly incomplete UIs for many needs previously met by nested folders.

From this I start thinking that folders will be eventually just replaced with labels but labels should become nested. Leaving terminology aside nested label becomes just a folder that can be assigned to multiple nodes. Which in Linux filesystems is called hard linking folders.

I just noticed that gmail has moved from simple Labels to nested Labels! Now you can create sublabels with seemingly unlimited depth.

Nesting structural aspects/sublabeling has become inevitable for gmail so hopefully UX aspects of working with nested labels becomes more standard.

Folders die immediately when you need one more way to classify your files. E.g. you have photos grouped by date, but want to add genre or group by people on the photo. The same with books - you can have them in one big list, because very often you can't really select the primary system for categorization, since one book may cover many different topics, so you may want to have tags for every major topic, and then also by year and by author. Plus some tag to mark books you've already read or planning to read.

It's outdated only if you want to really push good search. At some point you will have so many tags, that you'd like to tag tags.

I guess it also somewhat resembles with GMail not having tree threads.