there's an expectation in some quarters that streaming technology will eventually replace client-side gaming entirely, with Sony's Gaikai acquisition already being trumpeted as proof of this "inevitable" market movement. The reality in the short- to medium-term will be much less dramatic. PlayStation 4 is not about to become a $99 thin client for cloud gaming; it will be a powerful client-side gaming console with lots of storage for digitally distributed titles and a Blu-ray drive for boxed titles. It will also, however, use Gaikai technology, not to replace the existing functionality of game consoles but to supplement it.

What Gaikai promises, rather than an alternative path forward for high-end gaming, is a variety of new opportunities at the low- and mid-range of the market. It's a fantastic option for selling access to a back catalogue, for example, and should provide Sony with many new opportunities to monetise the impressive back catalogue of PlayStation, PS2, PSP and PS3 titles. Those opportunities are not merely technical (although this should, in theory, eliminate some of the barriers to making legacy titles available on new systems), but also commercial. Subscription business models or the ability to use back catalogue access as a sweetener for other subscription products are also opened up by Gaikai - and Sony has already demonstrated an affinity for that kind of proposition with PlayStation Plus, which makes an increasingly impressive library of software available to customers for the duration of their subscription.

Gaikai is also, as its founder Dave Perry has been keen to emphasise from the outset, a great marketing tool. As game demos have grown in size, now often clocking in at multiple gigabytes, they've become less and less appealing to consumers - many of whom, especially in the United States, face tough bandwidth caps from their ISPs. Streaming offers a chance to let players try a game instantly without the inconvenience of a large download.
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... The vision is straightforward - Gaikai everywhere means PlayStation everywhere. Televisions, smartphones, laptops, tablets, consoles, all accessing PlayStation Network and streaming your content from the cloud, finally allowing that extraordinary 15 year history of software to become a proper selling point for everything Sony. In fact, if Sony is being really clever, it will even extend this access beyond its own devices - honouring end extending Gaikai's E3 deal with Samsung to create an ecosystem around PlayStation which is accessible even from phones and TVs that don't carry Sony's brand.

I just don't see Sony as being in a position to buy anything right now. They're losing tons of money.

Cloud gaming will be useful in 5+ years when we all have fiber optic connections. As it stands now it's a novelty and it has issues like lag.

It is far more than that. It is streaming continuous 1080p resolution images to ALL Platforms simultaneously and allowing each player - irrespective of platform - to interact together in the same game and all with a similar experience. And all with about the same amount of lag as an XBox360

One GPU can serve two end users.