They don't have to compete with desktop boards, they only need to be good enough to compete with the under-powered and overpriced options available to laptops. The only hurdle is driver support, but all signs point to Intel nailing it.Can Intel ever compete on par with AMD and nVidia in this sector when there's such a big difference in size. GPU cards these day take two or even 3 spots on the mobo while Intel is keeping everything in a tiny package.
Bingo. 6+ years ago, Intel's integrated GPUs were so awful that it was worth getting a discrete GPU even for basic productivity purposes. There were any number of <$100 cards that weren't particularly good at gaming, but were a huge improvement over intel's garbage. Those cards weren't a huge portion of the market, but they weren't negligible either.you do not really se the lower end Descrete GPU's on the market anymore, you don't need them.
This is actually an interesting point you bring up, one which I plan to go into more detail on later. AMD actually jumped into this integration idea a lot earlier than most people realize. Most people have forgotten about Cyrix, but for a time in the late 1990s, they produced a CPU package which also contained a graphics and audio processor. AMD bought these and turned it into the Geode. AMD merged even more hardware into it, including the MCU around the same time they released Athlon 64. They were able to sell it at a relatively low price and were extremely successful in terms of sales, and a lot of this was because of the highly-integrated all in one design. AMD has been essentially working towards making a high performance version of that since 2000, and the Kaveri CPUs essentially have all of the same features (integrated GPU, MCU, DSPs for audio, etc.).But lets not forget the fact that AMD planned on integrated a GPU inside a CPU which was part of the reason why they bought ATI Technologies.