Microsoft's not promising super computing power in a box.  They're promising client-server functionality on a console, something which is/was a mainframe technology.

Client-server functionality isn't supercomputing power in a box, no per sae.  It's simply the ability to offload processing onto a beefier system.  It's a proven technology, as it has existed far longer than the majority of you kids have been alive, it's just that for a little more than a decade the power of the PC proved far superior to any benefit you could get from a mainframe/supercomputer.  That's not the case any longer. 

The question today isn't can it be done over the Internet, but simply can the latency be mitigated.  There are lots of ways to mitigate latency and distributed data centers is the key.  Something Microsoft has invested heavily into. 

This is incorrect.  Everyone cloud platform is not the same.  Case in point would be Playstation Now.  Playstation Now would be considered SaaS or Software as a Service.  This is just one of many different cloud services.  Each Cloud service takes the infrastructure and software to make it work.  Sony cannot just change Playstation Now from SaaS to PaaS Platform as a service which would be used to provide dedicated servers.  Even then the management and software needed to dynamically spin up a server for load is not something everyone has.  The complexity of certain cloud services are pretty big and the software and hardware to run them isn't cheap.

As to making a game run at 1080P, not going to go down that route much but ask you to do more research as your opinion is incorrect.  This stuff has already been demostrated by intel and Nvidia.

On your last point, if the net infrastructor is so bad then something like Playstation Now would not be possible.  The key is that what we have today will not be what we have tomorrow.  When money is involved, things change and they change quickly.

And there you're incorrect.

There is a lot that behind the scenes is being done that you will never visualize that is going on.  Azure to begin with isn't the name of the cloud.  It's the name of the software technology that Microsoft built their cloud with.  A software technology that they built.  As that technology grows and matures, some of those features are being developed with the PC client in mind.  So already Windows 8 includes some of the technology necessary to make the cloud a functional extention of the client PC.  The patent development that exists with regard to cloud-based computing seems to suggest that will only become deeper between the client (PC) and server (Cloud). 

Likely not this generation, but more so by next generation, cloud processing will be an integral feature of any computing device.  You just won't be aware of it.  It'll just be.  That won't mean some things can't exist without the cloud, just that most things will be better with the cloud.

You cant really assume its hard to replicate or that it costs millions if we havent seen how it performs.

For all we know, MS could have hooked up 10 PC's to process tiny AI files that hardly make a difference just to be legally allowed to market it like this.

Titanfall will be a make or break moment for all this hype.

I bet when it comes out and people ask about the AI then the responses will be using the 'oh its fun, thats all that matters' argument.

Yep.

I'll gladly be wrong if cloud can truly enhance games as it allows lower cost and powered consoles. But I doubt it will do anything really noticeable.

Wait, are you saying that Cell underdelivered? You truly don't know what you're talking about. Cell was ahead of it's time and PS3 exclusives still look like the best console games because of it. It is the RSX gpu that underdelivered and why Cell had to make up for the weak gpu.

The cloud is bullshit, graphics are the last thing I want to be dependent on my internet connection.

Yes, the cell underdelivered. Take a look at the initial advertising and promises that Sony made before the PS3 launch.

Heck, even Hideo Kojima lamented about the PS3's lack of performance. In a conference, he made a presentation about how the PS3's promises were so high that he began dreaming so big.. only to have to downgrade MGS4 because of the limitations of the actual console. I forgot what the conference was but it was presented with a funny graphic of Snake hanging on to a really high ramp that represented the PS3's promised power, but the ramp suddenly fell when the actual console was given to him.

Sure, there are PS3 games that look good now. But nowhere near as good as what Sony originally promised.

Killzone 2 says hi! Best looking FPS at the time of release.

"Killzone 2 is perhaps the best looking FPS ever made" - Kevin Van Ord (GameSpot review).

Uncharted 2, War 3, MGS 4, Killzone 3, The Last Of Us etc. All graphically best looking games of their respective period of release.

NO Xbox 360 or Wii game comes close.

Titanfall coming March 11. Thats delivering

lol. have you seen the 'original' killzone 2 trailer, the one that Sony claimed to be running in 'real time'?

well if you haven't seen it, i suggest you go take a look at it. the difference between that and the final game itself is baffling.

it's not about how the graphics look right now. it's about what was originally promised. the cell was 'supposed' to created photo realism in every game. it did not deliver on that promise, not by a long shot. again, read what you just quoted from my post. kojima himself found the ps3's actual power to be very low compared to what was promised.