Could Cloud Gaming Kill The Next Generation Video Game Console?

The current generation of game consoles is getting a bit long in the tooth, but signs point to late 2013 as the earliest that a replacement for either the PlayStation or Xbox consoles will come online. But then something interesting  happened this past week, which could change the way that console makers think about their hardware and software service: Sony bought cloud gaming company GaiKai for $380 million.
Sure, rumors abound about what hardware, chips, and specs these devices will have when or if they’re eventually released. All indications point to about the same type of hardware development we’ve seen in past consoles — including high-performance, next-gen CPUs and GPUs to power even more robust gameplay and graphics capabilities. But if I were Microsoft or Sony right now, I’m not sure I’d be betting on an ever-more powerful box to power its new game platforms. In fact, I’d take a contrarian approach and make as lean of a box as possible, and put all the processing power up in the cloud.
Sony’s purchase of GaiKai could be a harbinger of things to come. For those unfamiliar, GaiKai provides a cloud-based service for accessing more than 40 popular video games online, without the need for any sort of fancy hardware. Early reports pointed to the possibility of extending PlayStation games to other platforms where games could be made available — including mobile devices, tablets, and kiosks — creating a sort of “PlayStation Anywhere” type of service. But I think the impact that the acquisition could have on Sony’s next game console could be even more dramatic.