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AnthonyW86 said:
If they hade implemented a more powerfull gpu into the Xbox One they probably could have done this without the cloud.

The difference in power between the Xbone and PS4 is about 500 Gflops. To compare that's on par with three i7 quad core cpu's. If they use that for physics calculations they could run what you just saw natively on the console.

I believe what MS is trying to demostrate is that no matter how powerful of a GPU you put within a fix hardware, that fix platform will be outclass probably in the same year that its release.  We already see this with the PS4 and X1.  If you have a way to keep the fix platform performing for years to come better than what it startedd at then the console is more future proof and can stay on the market much longer without having to invest in a new device.