I'm just saying that it's different from "cloud gaming", like "onlive", where the whole game is running on the cloud. the latency really becomes an issue then, because all the input and output has to travel back and forth over a network
some of the things they're doing, like having your Forza AI race while you're not playing, wouldn't be affected by latency at all. the other MMO like stuff, has been tested, and works well as long as you have a decent connection (i.e. good enough to play multiplayer games). if they're smart, they have it deal with calculations that won't be affected by latency. like they could use it to tell the AI where to go next, but calculate the exact route client side. they just have to make sure they do it with stuff that doesn't need to be updated every millisecond
I understand the difference between onlive and what MS is doing. But there is no MMO or any other group that's doing what XB1 is claiming they can do with the cloud. In the US we don't even have the kind of network infrastructure to handle that kinda workload on that scale. So in any situation you would probably be seriously bottle-necked by the network.
Their whole idea to to steadily increase server workload over time to improve the quality of games. So that means even more is going to be off-loaded to the servers and I highly doubt they have to tech to do that well.
Look at EA and Sim City whole "server processing" that was proven to be bullshyt just to prevent piracy. Maxis Insider: EA Lying About Needing Servers For Single Player SimCity | Techdirt