With its new service, OnLive is attempting to literally render the PC hardware upgrade a moot point. Users will run a small, lightweight application that interfaces with a vast "cloud" of servers. The servers render PC games in high quality--delivering SD quality on a 1.5 megabits per second line, and 720p on a 5 megabit connection--then output the video to your display of choice: either a PC, or a television with an HDMI dongle.

The goal was to free up users from the bane of hardware requirements, providing a hassle-free option for PC gamers. The service will carry a subscription cost, and members will have the option of renting or purchasing the available games. Nearly every major publisher has signed on, with one notable exception being Activison Blizzard.

It sounds like one giant leap forward for PC gaming on paper, but many were skeptical of the technology following the announcement, thinking that the inevitable lag would result in an inferior gaming experience. After getting my hands on the thing, I can report that OnLive mostly works as advertised--but a few flaws may hold it back from being a home run.

The OnLive interface itself is as slick in motion as it looks in a screenshot, and the "Brag" replay feature and spectator modes worked as well as they claimed. But who cares about that stuff? I wanted to play a game, and see whether this thing lived up to the hype.

With several options to choose from, I eventually settled on BioShock--it being a game of high visual quality, and also a first-person shooter, which would give me a decent sense of the response time. Loading the title up, I at first had no sense the game was being streamed to the small PC laptop next to me. Menu response was fast, and 2K Boston's gem looked as it should.

But unfortunately, the illusion faded along with the loading screen. Once I was in the game itself, I immediately noticed the unwelcome signs of blocky compression. It wasn't so compressed that it was entirely distracting from the gameplay, but it was also worse than I expected. The visual quality was high, but the experience was marred by the considerable amount of splotchy pixels.

Playing around in Rapture, I found that response-time lag was mostly unnoticeable--mostly. When turning quickly, there were disappointing moments of hitching here and there. It was an impressive technical accomplishment, but at the same time unquestionably inferior to playing from a disc.

I asked OnLive representatives whether the connection at GDC was indicative of the optimal connection experience, and they replied in the affirmative. They stressed that three OnLive connections have been run on a single 6mbps Comcast connection in their tests, but I wondered whether any of that mattered.

Gaming has been firmly planted in the HD era for several years now, and most gamers are surely accustomed to seeing low pings in Counter-Strike at this point. While some people out there may not mind playing Crysis with a few blocky pixels and a couple hitches here and there, I'm not sure those same people were the sort interested in playing Crysis to begin with.

So while OnLive is truly an amazing piece of technology, it is also an imperfect solution. It may represent the future of PC gaming, but the visual and lag issues, subscription cost, online-only nature of the product and other caveats will hold it back from being an immediate no-brainer.

The service mainly delivers on its key features, and looks like an exciting option for those tired of constant hardware upgrads. But based on my demonstration--and as someone that demands the highest quality presentation of most games--I'd rather put the subscription cost toward an upgrade of my Nvidia card.

Developed in secret across the past seven years, OnLive's service will launch this fall.