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Machiavellian said:

As stated, you can actually google about using Azure to do raytrace work or other graphical intensive work.  I use Pixar as an example of the work that can be done in the cloud for graphics.  Also what you forget is that MS can easily scale the output to the conditions of the work needed.  In other words they can scale the graphics to go untra deep for making a movie like UP or they can scale down the rendering for making scenes for a game which would not need as much graphical grunt.  This is the flexibiliy of MS cloud solution which gives it a huge advantage in doing stuff of this nature.

What you did not understand from what I stated is that MS can do EXACTLY what GaiKai do but it can ALTER the rendering engine of a game to do more intensive graphical features like Raytrace.  The data would be compressed into a video stream and send it to the client machine.  This can be done today and it has been done.

No. MS can't... they have one limitation... Internet... that won't change even if MS put 1 trillion servers to run.

The quality of Gaikai for stream graphcs is way below a console render... you can do that but the result won't have the same graphical level than rendering in real-time in your console.

A constant 5Mbps internet connection can't hold a 720p@30fps streeming game with a hell of compreension * you know video compreension means less quality? *.

Again Internet won't change even MS create a pool of zillions of servers.