AMD's acquisition of ATi came somewhat as a surprise. Why would a CPU manufacturer want to buy a performance graphics card company? But it shouldn't have been surprising: integrated graphics will be the next big battle in hardware.
For those that don't know, the graphics processor in your computer is the thing that actually draws pictures on your screen. When it comes to playing games or watching videos, it's probably one of the most important parts in your computer. An underpowered graphics chip will result in the video looking "choppy", because it can't keep up the framerate.
Integrated graphics processors (IGPs) have always been seen as providing inferior performance to a discrete graphics card. Until last year, IGPs weren't powerful enough to play high definition movies, or even run Vista properly.
But because of the low cost to consumers, Integrated Graphics has snapped up a hefty 60% of the market share of graphics processors.
AMD's purchase of ATi was a good business move. It puts AMD in a position to be able to try and integrate ATi's lower-end graphics processors into an AMD chipset. Intel really doesn't have that sort of advantage; instead, trying to develop this capability from scratch, in-house.
Nvidia has recently declared war on Intel, after an Intel rep said that people won't need discrete graphics in the future. Nvidia's response was to pair up with Via, another CPU manufacturer, to create a new, low-cost platform.
It begs the question... Will Nvidia buy Via, to create a third CPU vendor? And if this happened, wouldn't they just be proving Intel's statement?