Crysis has recently been demonstrated on an iPhone, but before you get too excited, the game was executed on a PC but streamed over the network to an iPhone, making the iPhone the actual gaming platform. the concept is not new, companies like OnLive did similar demonstrations -on other platforms- at GDC. OTOY, the company behind the Crysis demo is currently working on the same type of gaming over the network.
The basic technology behind this is a proprietary low-latency compression scheme that allows the images to be computed on a remote server, then transferred fairly quickly to a “controller device” (here, the iPhone). The catch is that you need to be somewhat close to the datacenter because the latency would otherwise be greater, making the gameplay difficult. In a way, this is really an infrastructure problem. Let’s hope that they all get it right.