At the end of the demo the cloud is doing the physics for 37,000 chunks, position, velocity, rotation. Updating all those independently moving chunks at 32fps plus the geometry changes for new chunks, broken up chunks and left behind gaps is a lot more data than a h.265 compressed video stream.
And the client still needs to be able to render all that extra geometry. You're taking the physics calculation away, not the strain of rendering 37k objects.

It's a good example of how a Gaika/Onlive server can deal with high stress situations by utilizing a server farm to spread peak demand. As long as not everybody is blowing up everything at the same time, it will be a more economic solution instead of having the peak power available for each client separately. It's a tech demo of how slow down can be eliminated in a server type situation. I don't see it being practical as helping out a local machine with physics.

From my understanding Gaikia does not leverage spreading a game over multiple servers, instead, Gaikai spins up an instance of that game for each user that is playing the game.  What Gaikai could do is take the rendered output from the game and spread that out to multiple servers for processing which is pretty easy with video output.  The difference with MS solution and Gaikai is that MS solution does not need an instance of the game running for each user.  Instead one main hosted instance can be used to support multiple users as the hosted instance just neeeds to sync the streams and send the data off to be process by mutliple servers.

Another advantage of MS solution is that its not dependant on the hardware.  For Gaikai to work, the game is actually rendered on PS3 hardware.  I am sure for PS4 games, those games might need PS4 hardware as well.  MS solution can use any combination of hardware and software making the cost lower to support.

So what you are saying is thats all a company has to do is rent thousands of servers around the world to simulate what would be required to support a game with this tech.  In order to have quality of service for anyone playing your cloud based game, you would  need servers everywhere you sell your game.  Hmmm sounds expensive to me.  

Cheaper than owning, running and maintaining these servers.

Also what you are saying that you only need is a client server setup and thats it.  You do not need a development platform that makes it easy for a developer to have a  multi-thread hosted instance where sending multiple streams of data from individual clients machines, replicate those streams  or split the data so that you can use mutliple servers to process the data, sync that data to the multiple client machines and send the completed stream back to the client.  So such a setup is something game developers can spin up or any company can just spin up in months if they decide to go down this route.  

They can indeed, it's not as difficult as you seem to want to believe it is, the servers themselves act only as a job scheduler, they receive and transmit completed computational jobs either in tandem or in batch, it HAS to be this way otherwise you would be hardcoding specific tasks to specific servers and that would make each server single purpose, increasing the operating costs exponentially.

nobody goes down this route of bothering to do so however simply because the framework is not there for it to be a viable solution (internet access, speed and stability is too big of a variable to bank on it being there).

I believe you are underestimating the work and investment needed to setup such an infrastructure.  MS already spent 3 years doing it and they still not totally ready to go to market.  Not sure why you believe this is something that can be done in a shorter time frame.

MS werent the first to do it, its been attempted multiple times before, abandoned or shelved just as many times, each time the operating costs outweigh the usefulness because the simple truth is that the variable of speed, bandwidth, latency and network availability cannot be relied upon enough for it to be a primary feature of a commercial product, as such the only thing that can be done is the storage and modification of cloud stored data as per forza 5.

Cloud computation is possible, for any device, regardless of the time and money you spend on the technology however, it pales in comparison to the very real situation of it not being worthwhile in its current form.

I believe you overestimate Microsofts ability to deliver a product that is limited in both functionality and usability by factors microsoft cannot control.

DirtyP2002 said:

so, everything online is cloud computing to you?

Its easy to see that MS is not concerned about people without internet.  Actually their first plans for the X1 is a clear indication of how much MS is concerned about people without the internet.  As for MP why would you think this really make a big difference.  Sending just the calculated info can be heavely compressed.  The amount of info would be nothing even with MP.  The problem is not the amount of data or even your speed of connection but more about ping time to the server sending the info.  This is something that MS has an advantage because they have servers around the world so low pings is very possible.

We don't know how gaikai exactly works (i mean tech PoV, like load balancing). Besides, games don't need to run PS3 hardware. If development mashines were PCs, then i see no problem to run it on regular servers.

You also seem to forget about one very important thing - purpose. Gaikai aims to deliver sort of emulation for older games. This is only an addition, charged service for those who want to play some good, older games. And the whole thing behind this MS cloud thing is to deliver performance on the pair with PS4 for all modern games. And still, Sony has shown working Gaikai games, and more or less release date (in few months!), while MS shown nothing but simple, labolatory demo of something we might not see in this decade.

I guess in the end the difference stems from being a licensed developer for the past decade and being an armchair enthusiast.

I guess the difference stems from someone also being a licensed developer who build cloud based applications and someone who is an armchair enthusiast.  I can show you my credentials and you can show me yours and we can start again without making assumptionns.