that kind of "cloud gaming" is what Sony is trying to do with Gaikai. M$'s "cloud computing" is kinda different. there could still be latency issues, but it wouldn't as noticeable since the majority of the game, and the interface, is client side. it's pretty much the same way most MMO's works
this is why I think they should have come up with a different term, or way to describe what they're doing
Nah it's basically the same thing. MS is using the servers as cloud processing in the background of games and eventually wants to off-load more of the processing power to the servers.
I don't think we're at that point where tech can seemlessly share processing power between servers located thousands of miles away and end user systems. And it's not even really about how fast your internet speed is because there's going to be some lag between sending the information, having it calculated, and returned, even with gigabit internet.
MS idea behind this is to extend the life of this gen by having it cloud-enhanced instead of giving end users more hardware. They're gonna have to have something really revolutionary to pull that off and we haven't seen a lick of how it works.