Consoles are based upon a pre-set pool of computing resources that don't change once specs are finalized; everyone gets that.

But there is an overhead "cost" for things like operating system (uses system memory) which can be decreased with firmware or operating system updates. In effect, by freeing up memory that was previously unavailable for game engines or code, this reduction in background overhead has effectively expanded the pool of accessable memory for developers to use for their game engines and code. 

Kinect supposedly uses something like 10%, maybe even more, hardware resources by simply being plugged in, looking at you through its lenses, with its mic array active, waiting for user input commands. 

So, with the adjustments made for XB1s with no Kinect enabled, those functions can be shut off and the memory and processing resources allocated to them made available to software that doesn't use them.

The only problem with this is in determining when and how access to Kinect functions is activated and deactivated on demand. Keep in mind there will be plenty of XB1s with Kinect always connected, which means MS software engineers will have to find a reliable way to effectively quit and relaunch Kinect software/drivers when players switch from non-Kinect software that requires the use of those resources previously used by Kinect and normal operating functions since the XB1 operating system itself currently requires Kinect. 

As for cloud computing; it's only been six months.

While I don't doubt that developers are working on projects that utilize cloud processing, it is by in large a technology in its test phases with regards to the XB1 platform. In other words, not too many developers are going to want their games to rely upon this to gain the results they want. At worst, it would be used as a crutch for local hardware limitations that could potentially break a game that doesn't have access to cloud processing resources.

I wouldn't be surprised if MS marketing labels future games with "Better with Microsoft Cloud" for games that are noticeably improved by the use of cloud processing.

In the meantime, it's hardly something to place one's brand name hopes, dreams and fandom on until consumers see the hard benefits of this resource.

Off topic. Bur flamingwheasel's alternative ID ban is hilarious. He is still fighting with alternative ID. Why is he using alternative ID? Did he got permabanned?

Umm.. He has been permabanned since April.....

If you believe this then you haven't actually sat down and thought about how it would work.

Fragmentation, varying bandwidths, scaled software builds, incentives from devs... It doesn't look pretty at all from a practical standpoint.

What is practical is a drive-atar system like in the latest Forza. That's a one-to-one replacement of offline code with a downloadable, non-dynamic segment of code (the AI behavioral code) so the points in the paragraph above don't apply.

But this drive-atar feature is entirely possible on any system. It just requires dedicated servers as there is very little computing to be done. It is in fact very similar (but slightly different) from uploading other player's ghosts in time trial and has therefore (practically) been done before. I thought it was a brilliant system (which I hope GT copies), but it's nothing to do with MS's claims.

Improved visuals... No. I'm afraid it's not going to happen on any meaningful scale. A handful of exclusive games might have slightly better shadows or reflections, but it won't be a significant improvement - just something to say "we told you so". This is a fact that anyone with a little technical know-how can corroborrate. FYI I have developed quite a bit of software.

I wanted MS to release something completely different from what eventually became the X1, but unfortunately (for me) I'm not their target audience it seems. 

We can make educated guesses though.

Didn't they just have another cloud tech demo like a month or two ago? I thin MS is still trying to push this BS.

Hilarious considering that was enough  for Microsoft to lose faith, make the ultimate 180, and drop kinect.

Wouldn't the ultimate 180 be the DRM reversal. Or putting a new GPU in all future Xboxes? And not Kinect.
 Besides,  what does that have to do with this conversation? 

Realism happened.