This 10-minute video shows the last part of a three-part video interview. Carmack talks a little bit about the sparse voxel octree raycasting stuff that he's excited to do research into. Then he wanders off to cloud computing and his excitement goes visibly through the roof.
From http://www.eurogamer.net/articles/digitalfoundry-carmack-next-gen-blog-entry :
"The big question is, are we going to be able to do a ray-casting primitive for a lot of things?" he ponders. "Certainly we'll still be doing a lot of conventional stuff like animated characters and things like that very likely will be drawn not incredibly differently from how they're drawn now. Hopefully we'll be able to use some form of sparse voxel octree representation cast stuff for some of the things in the world that are gonna be rigid-bodied... maybe we'll have deformations on things like that. But that's a research project I'm excited to get back to in the relatively near future. We can prototype that stuff now on current hardware and if we're thinking that... this type of thing will be ten times faster on the hardware that ends up shipping, we'll be able to learn a lot from that."
However, while he predicts that the leaps in cutting edge console technology are set to continue (certainly there is no hint from him that Microsoft or Sony will follow a Wii-style strategy of simply adding minor or incremental upgrades to their existing hardware), we are swiftly reaching the point where platform holders will be unable to win their battles against the laws of physics.
"We talk about these absurd things like how many teraflops of processing and memory that are going into our game machines," Carmack says, speculating off-hand that the next gen consoles will have at least 2GB of internal RAM. "It's great and there's going to be at least another generation like that, although interestingly we are coasting towards some fundamental physical limits on things. We've already hit the megahertz wall and eventually there's going to be a power density wall from which you won't get more processing out there..."
That being the case, he speculates that the game-makers could move into different directions to provide new game experiences and at that point, the almost mythical cloud computing concept could make an impact.
"There'll be questions of whether we shift to a cloud computing infrastructure... lots of interesting questions about whether you have the computing power in your living room versus somewhere else," he says, noting that while latency is a fundamental issue, the sheer scope of storage available online opens up intriguing possibilities. "Certainly the easier aspect of that is 'net as storage' where it's all digital distribution and you could wind up doing an idTech 5-like thing... and blow it up to World of Warcraft size so you need a hundred petabytes of storage in your central game system. We can do that now! It's not an absurd thing to talk about. Games are already in the tens of millions of dollars in terms of budget size and that's probably going to continue to climb there. The idea of putting millions of dollars into higher-sized storage... it's not unreasonable to at least consider."