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Here's what you need to know about cloud computing and games.

1. Cloud Computing will never be viable for gaming.
2. Hybrid local/cloud computing can be viable do. Key word being "can" as there are no real-life scenarios to use an example. It's all just wishful thinking at this point.
3. Even if Cloud Computing in whatever form makes its way to console games, American internet connections vary wildy from state to state. For example the average internet connection speed in Delaware is 10.88Mbps while the average in Delaware is only 3.74Mbps.

Using OnLive as an example, it requires a minimum of 2Mbps connection. That's actually much improved over the last few years, but considering this would only get you a resolution of 1024x526, its not suitable for HDTV gaming. The recommended connection speed is 5Mbps(sorry Delaware) and that will only bump up the resolution to 1280x720.

The point is that cloud technology in regards to gaming won't be viable for a long time, if ever this generation. Bragging about fantasy scenarios is amusing.