I feel it would be good to have a discussion on this, because it is one aspect that is commonly left out when reviewing most new cloud based devices, even though it has some of the largest impacts on the effective reliability of the product, as you essentially have the sword of Damocles hanging over your device.
A recent trend, has been to make internet connected devices / appliances, rely on a remote server for the majority (or all) of their functions. The most notable examples of this are products such as dropcam, vuezone, nest thermostats, and various other products. The issue I have with this is, instead of using the cloud to enhance a product, many companies are shifting functions that were traditionally hosted locally on the device its self, to a remote server in order to turn them into additional revenue streams while also having direct control over planned obsolescence. (Prices can easily go up for the service, and free services can be converted into pay ones, or the company can simply go out of business; all of which can potentially leave you with an expensive paperweight)
As an example, lets look at the traditional IP camera, and a cloud reliant one such as dropcam or vuezone. With a traditional system, all of the functions can be implemented in a offline or P2P fashion where there is no need for you to rely on a remote server that is out of your control, and if you want the some of the benefits of the cloud, you can set up your own remote servers for monitoring and recording footage from the camera, or hire a security company to record and monitor your cameras. With a cloud only camera, you have additional points of failure, and if anything bad happens to the servers or the company, or they make a change that causes you to be unable to afford the service, then your product becomes useless.
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In recent news, HP announced that they will be shutting down all of of the servers supporting the webOS platform, and in that message where they explain what it will mean to you, they state
"You will no longer be able to backup, restore, reset or initialize a webOS device as of January 15, 2015."
Meaning currently running devices will still run, but if for any reason you need to factory restore it, you will not be able to complete the process as the initial setup cannot be skipped, and requires you to sign into your webOS account.
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A large number of devices are increasingly becoming more reliant on servers out of the users control, for more of their most basic functions, and I can only see the fallout from when the service fails, to get worst, especially if a more heavily used service gets shut down at the whim of a corporate executive.