If Intel pulls this off, there won’t be Nvidia and ATI, at least not the way they are now. Intel wants to push on Raytracing and this highly computationally extensive method to render a photo realistic graphic.
It won't happen overnight, but it looks that Intel wants to push on Raytracing and that we should expect some first scores in the next two years.
Larrabee will do Raytracing really well, it will be fast; and we heard from some other sources that this multi- core architecture will be very fast, at least for Raytracing. Since this marchitecture scales much better than the graphic methods that are used today, Intel will definitely push for it.
With the right marketing money and Intel’s 'the way its meant to be played' methods this can actually affect some big publishers and developers.
First, Raytracing games and engines are still two years from now, but current Geforce and Radeons are very slow in Raytracing so Nvidia and ATI would have to adopt it, at least if Raytracing takes off.
In that scenario, Nvidia and ATI would have to adapt in order to survive. There is absolutely no question that Raytracing is the way to go, but the current graphic cards simply cannot cope with it.
After that, the next step is Global illumination, something that is even more difficult.