The problem is that games cannot rely on it. Devs can't really use it because you don't know how the internect-connection is. The problems are the same to what Sony will give gamers via Gaikai - a totally unknown gaming-experience which relies on something both MS and Sony can't change.

Exactly and that's why Gaikai will also not work for everyone.

Then tell me how I can use Gaikai right now so I can build up my own opinion. According to their homepage they have

200+ TITLES. 50M+ GAMERS PER MONTH.
A GUINNESS WORLD RECORD.

But I want to be part of it and can't. And if you look at their "careers"-link it seems they are in enormous need of staff.

A nice one: "Must be able to lift 60-70 lbs of equipment on a daily basis." :)

Before PC was affordable. We would have a big server box that does everything for you. So, an office desk would have only the monitor. They were called "client".

Cloud-ing is the same concept. Except it's over the interwebz instead of physical wires that run all over the office setting.

Oh yes, the history of computing... First, mainframes, which was a necessity. Then everyone wanted to have a computer at home which was a very big success - Atari, Schneider, IBM, Commodore, Apple... They changed the way we live today. But aside from the usual crowd there were always technologies that kept the "thin client" alive. Remote shells, XWIndow system and all this on the user side, on the devside there were technologies like RPC, Java RMI, SOAP, Corba... All were designed to use ressources of remote-servers.

Nowadays this is done via internet and "the cloud" and consumers are surprised while technicians are not *that* surprised because it's not totally new technique but presented as new. Still there is space for new developments. I am still happy that Dropbox and its nice syncing and archiving-functions exists and it works perfectly for me. It solved me from building up my own solution for archiving my diploma :)

Once NBN rolls out in my area I might consider picking up a One then.

All single player console games will have to support the same gameplay whether there is adequate internet connection for cloud computing or not. That means these games will be build with the NOT in mind as they should be.
See a fast paced game that makes all it's game mechanics computations on the cloud, say Diablo 3, has (had?) all sort of trouble with latency and bad responsiveness because of this even when playing solo. It is up the the implementation/load on the servers that's true (in contrast, a MP only game like World of Tanks in the same network conditions ran well), but there are dangers.

Free? Lol this is ur live dollars being actually put to use. Also onlive was on the verge of bankruptcy and they weaseled their way out by selling cheap and f'ing over their investors. U got no idea what ur talking about quit it already.

I dont see how cloud-computation could help to visually improve a game. Either you stream the whole game or you dont. Of course it might make sense to compute some AI in the cloud (agree in that aspect). There is huge latency involved when use the cloud. How would you improve GPU computation having such latency?!

Considering also the additional complexity and development costs it does not make any sense.

To me this sounds like marketing non-sense and findig reasons for always-online.

LOL Dont want to get into technical on this stuff as many people have explained on this thread that what and where are the bottle necks. Ill say its just ridiculous to thinking about Cloud processing for "gaming" this generation. Maybe next generation, 7 years down the line when a new console will be introduced MS will release just a cheap hardware based around their Cloud. But with xbone they are building a base for that future, Just like they used 360 as a trojan Horse to replace it with an entertainment hub..