Presumably the OnLive Desktop service will provide fast, maintenance-free access to a Windows PC and its applications from your iPad without having to keep the remote machine updated with security patches and anti-virus software. While such remote desktop applications have been available on the iOS and Android devices for years, this move should come as no surprise. The decision to sell its extra capacity makes sense for OnLive, whose business model has traditionally been selling online access to video games running on its servers.
It will be interesting to see how the market reacts to this new service. The awkwardness of using Windows 7 with the iPad's touch interface could might be enough to deter large-scale adoption. While there are still a lot of unanswered questions, OnLive Desktop is sure to be the source of geeky experiments, fun hacks, and technical debates in the coming weeks.
UPDATE (4/12/12): Due to licensing concerns, Microsoft and OnLive have reached a deal in which the backend of OnLive Desktop now runs Windows Server 2008 instead of Windows 7. This is an unfortunate setback for OnLive Desktop, which utilized some of the integrated touch interface components of Windows 7. While the service is still up and running, the obvious benefits of a touch integrated OS are painfully missing. According to James Kendrick, "While OnLive Desktop still looks the same, the absence of Windows 7 under the hood is sorely missed. Gone is the great touch optimization that made OnLive Desktop a joy to use in my original review. That was provided by Windows 7 and thus no longer there."