Actually the best implementation = MS Lab + .Net Passport + App installation previlige = cloud OS.
MS lab I am refering to is the one you can try MS product on their server.
.Net Passport = login using your .net account.
App installation previlige to install your app in MS Lab machines.
I think this is a cool idea to have cloud OS like this.
I wonde if Google is doing this? But, I do see this a good alternative to lagacy solutions. However, most legacy apps on server based, which doesn't seem to be a good choice using cloud OS somewhere else. And many legacy apps like my father's VCD burning software requires to communicate with CDR directly, so not sure this would work either.
Seems like this only works for games because other apps should be upgraded instead keeping legacy copy. If that's the case, might as well use onLive because games often game requires CD validations as well.