Interesting article: http://spectrum.ieee.org/computing/networks/game-developers-see-promise-in-cloud-computing-but-some-are-skeptical/0
I have totally embraced the cloud computing idea. I hope OTOY and OnLive can pull it off and create a paradigm shift from client to cloud rendering. The main problem seems to be lag. Apart from the extra lag introduced by encoding/decoding the video stream at the server/client side respectively, which should not be greater than a couple of milliseconds, there is lag due to the time that the input/video signal needs to travel the distance between client and server, which can amount to several tens to hundreds of milliseconds. This is due to the fact that information cannot travel faster than the speed of light (via photons or electromagnetic waves). Quantum physicists have discovered ways to do quantum computing and quantum encryption at 10.000 times the speed of light, but they all agreed that it was not possible to send information faster than lightspeed, because they could not control the contents of quantum entangled photons. But very recently, Graeme Smith, a researcher at IBM has proposed a way to "transmit large amounts of quantum information" described in the following paper, published in Feb, 2009:
If his theory holds true, IBM or someone else could make a computer peripheral based on quantum technology (sort of like an Apple Airport) that can communicate large amounts of data instantaneously! Distance between client and cloud would no longer be a problem and transmission lag would be non-existent! It would make playing server side rendered games an almost lag-free experience and the ultimate alternative for costly, power hungry consoles.