ATI already showed their 4870 was more than capable of real time ray tracing, and given the 5870 ups the computation power from 1teraflop to 2.82 teraflops, gee i guess it's far fetched that it could keep up.
As i've said in many posts in many forums larrabee just doesn't have the computation power to match up. It would need 48 cores at 2ghz a core just to even the processing power of a 5870. When their 24 core version was already drawing upwards of 300w, where the 5870 draws a max of 180, doesn't seem like to much incentive.
So what is Intel has been pouring obscene amounts of money into R&D? It's far from the first time. After nearly $20 billion. that's $20,000,000,000 over a decade they ended up with the itanium. It sold 8000 units and is THE failure of the hardware world.
The timna, development began in 97, was announced in 99 was to be the first Cpu with on die gpu and IMC. It was launced, recalled, redesigned, unresolved and unpursued. Intel Failed to succeed in that endevor until they were able to arrange a cross license agreement with AMD to use AMD's design for 64bit code, IMC, and HT bus.
It's a niche project in their attempt to have thier hand in every aspect of a computer platform. Given that it's intel the larrabee will probably be 10x the cost of what the performance is actually worth.