ICStats said:

nVidia has some very powerful servers with lots of Kepler boards and they are great for professional rendering for movie studios, who can afford to pay $20K+ for these things to improve productivity.

I don't think MS have GPUs in their cloud.  Xeon CPU's designed for cloud don't even have embedded graphics.  Even though one or two cores on a Xeon server may have quadruple the power of the Xbox One CPU, it's actually not enough to draw much graphics.  The XB1 can render far more graphics on it's own.

We shall see.  There are a few things that can be done, but not very impactful IMO, and take a lot of developer effort.  I mean, I'm a graphics developer.  If you asked me to come up with any ideas for using the cloud for graphics I could give you some, but if you asked me if I think it's a good idea I would say no way.

Devs will use the cloud for what is a good fit, not try to do something weird which would break the game if you had spotty connectivity or an offline user.

You are right to an extent that Xeon doesn't have integrated graphics, mostly.
However there are Xeons that were on Socket 1155 and 1150 that do have Intel graphics which can use OpenCL like the Xeon E3-1245, but those are the kind of Xeon's that wouldn't be used in a server it would be the Socket 2011 variants.

The Azure CPU's are pretty horrible though.
Rumours suggest the CPU's are roughly around the level of an AMD Opteron 2347 HE @ 1.6 - 1.9ghz.
So I would hazard a guess that an 8-core Azure set-up would be at most... 50-100% faster than an 8-core Jaguar, dependant on application of course.

A Core i7 3770K with 4 Cores@ 3.5ghz is roughly 3x faster than an Azure Quad Core chunk both in single and multi-threaded scenarios... So throw another 10-30% in favor of a newer model Haswell.
If you intend to use the "Xbox Cloud" to assist in *anything* that is heavily single threaded, it's literally going to fall over on it's ass, multi-threaded stuff will of course shine if you can have a massive amount of cores at your disposal and can scale the compute to take advantage of it, however that could end up being costly if you have 8 cores dedicated to a single game and a few million gamers decide to jump into a game at the same time all requiring 8 cores each.

--::{PC Gaming Master Race}::--