You must remember that there is a difference between profit and cost.  The cost for MS to distribute processing to a certain number of virtual servers compared to the profit margin they get for such resources when selling it as a profit.  The gain for MS is to get as many customers using Azure as possible and getting them tightly integrated with its services.  There will be aspect to this business plan which will require them to give away resources for free to get more subscription subs.

Phil made a tweet that we will be seeing more on this tech as well as the demo is not a throw away piece but could represent something larger that they are doing.  What I am guess we will see is how MS will monetize their platform which may not mean charging customers but instead getting developers, Publishers and other content providers on Azure which would pay for their cloud compute on the customer end.  I am also sure MS is looking to get a good percentage of XBL Gold subs which also goes along the cost of providing the service.

The thing for MS is that they have paid for the servers and infrastructure.  They are not renting, they are the provider so cost of resources can be balanced with cost of usage.  Another thing that is not know is how MS is spreading the work amoung multiple servers. I hope we get more technical detail on the process as I am interested in some of the problems MS must face with delivering this tech.

Wow, I will not try to have a real opinion on this topic. If I do, I will be moderated by the new group of Mods.

On Topic:

The demo seems to prove something, but it is hard to get people to accept it for what it was. When some people are counting the objects or debating internet speeds it proves they didn't get what was being demoed. It was a simple offload of some calculations to a remote server. Sure, there are a bunch of factors that can be in play. They didn't claim to be implementing this into current games. M$ has said that this is what will matter down the line as the console ages and the hardware becomes further behind the future power needs. Just a tech demo used to get developers to try to implement elements into their games. Later, they will try to sell the developers server access for their games. $$$ money grab down the line...

That was the first thing I noticed.

Very curious to know what "collection of devices" they are talking about.

Do you remember the PS3's you could trade in to get an XB1?

To set the fact straight, I called you out on stating you were a developer.  it was you who first mentioned about being a licensed developer and calling me an armchair poster.  So no, I stated we both can send each other our creds then start again instead of trying to call people names or make assumptions about their knowledge.  Even still, just because you develop does not mean you develop in this area.  The type of software I develop does not mean I can state I know how a game developer does his job.  The whole point is that you put that you are a licensed developer part as if that qualify you as knowledgeable about the subject which it does not.  Even I who have developed on cloud based platforms can only reference the type of work I do which is totally non game related and in most areas probably not going to be relevant but then again I was not going to come off as that way in the first place. 

Alright this is my final post on that stuff as I am not interested in waving creds but instead the topic.

Edit:  I apologize for coming off in such a way.  I get little riled up when I believe I am being slighted but I also need to keep a more level head to my post.  We have resolve this issue and do not plan on going down that route again.

Dear god.....they're bringing back the cell. In the end, Skynet still begins.

I've got ample experience with the latest SDKs for the current consoles and how currently-in-development, as well as already released titles utilize cloud, thats my point, outside of gaming the usefulness of cloud based computation increases dramatically because load based scheduling that would locally take a long time anyway loses nothing if that load is pushed elsewhere to be computed remotely and the results of which passed back.

Cloud computation on rendering, or cloud like swarming for deformation, fluid dynamics, thermodynamics and so on are just as viable, but gaming, the viability of cloud based compute drops considerably, the best we will get in this generation is sub processed light math, that being lighting computed externally and the result streamed back as low quality monocromatic video which is essentially used as a the dynamic lightmap, but even then the local processing saved in doing this is minimal and would not be able to react fast enough to user input to be permissible on high dynamic objects, if youre muxing in the stream for a specific area cast from a building in a set piece with realtime lighting then depending on the speed and predictability of motion in the objects you want to calculate, then the viability for such processing is there, and could cause minimal issue should connection drop in quality or all togehter.

beyond that though, we lack the connectivity to the average home and the hardware in these clustered servers to handle the demand of hundreds of thousands of clients connecting to process entirely different chunks of resource for various applications and games, hence why lab environments are all we've seen such computational demonstrations thus far.

Sure microsoft would love to use it as a springboard for azure adoption but its not like they'll get much from additional XBL subscribers, Azure is doing fine as it is, without the gaming side of things chipping in, the gaming side has little impact other than being a bullet point for presentations and something to whet the lips of those attending such conferences who want to see how flexible the technologies can be.

I maintain that we are years, perhaps a decade or more away from cloud computation making a descernable difference in games that could not be achieved with simple server side communication on existing infrastructures, or by simply having additional hardware resources locally (such as additional power on ps4).

I don't know, that doesn't really convince me. Sure, Microsoft could sell cloud computing resources so cheap that they're actually making a loss, to attract new customers etc. They could cross-finance etc. etc. But those are not sustainable solutions. In the end, someone has to pay for the costs. If someone wants to to use the processing power equivalent of 16 high-end PCs, 40 Xbox Ones or whatever,  someone has to pay for that.

In a few years from now, it will probably be like this: Video game consoles will indeed be hardly more than very simple and cheap streaming devices, with pretty much all processing being done in the cloud - and people will pay different amounts of money depending on how good they want the graphics quality to be, maybe something like "2 Cents per minute for Xbox 360-quality graphics, 2 dollars per minute for raytracing quality graphics in 4K resolution"

You are partly right. The average quality of the game will not exceed that what you can get with local hardware.
However peak demand can be better absorbed in a server farm setup than on your local hardware. Not everyone plays at the same time and most games don't demand that much all the time. Plus in a multiplayer game, the world and physics only need to be done once for all the clients. So when you play a streamed game you can get about the same level of graphics as you would get locally, but instead of heavy explosions being restricted to cutscenese, they can now play out in real time.

potential?