The OnLive service was pretty cool, both the game side, and the Microsoft Office on iPad product.
I think the biggest problem wasn't that the products didn't work -- it's that they gave a fairly mediocre experience.
It was like playing last year's game on a 3 year old desktop. Same with the iPad experience.
It could be that I'm too much of an Early Adopter to be part of their customer demographic. I always try to get the latest gear etc. Maybe the late adopter struggling to hang onto MS Word instead of using any of the purpose built iPad word processors and sharing via the cloud would pay for the service.
I didn't follow the gaming community as closely, so I'm not sure what kind of paid market share they were getting there. I'm guessing it wasn't appealing for hard core gamers -- at least not appealing enough to shell out dollars for.
External factors, like Microsoft cracking down on licensing for remote access, and tier 1 game makers choosing not to launch on the PC might have played a role too.
It's sad to hear about them going into bankruptcy / reorganization, but sometimes that's the only viable way to pivot a business that can't establish a working revenue stream.