It is a little known fact that Intel is by far the manufacturer with the biggest installed base of graphics chips (not video cards) with more than half of the market and due mainly to the fact that it ships hundreds of millions of chipsets every year with integrated graphics.
According to John Peddie Research, Intel's market share was actually on the rise during the last quarter with Nvidia and the smaller vendors (Matrox, SIS and Via) seeing their market share shrink to 30.4 percent.
The idea behind Pine Trail according to Intel is to reduce manufacturing costs while at the same time, improving power efficiency and performance.
It is actually a return to an old concept, that we remember, came from Cyrix's 12 year old MediaGX CPU which pioneered a concept called Virtual Subsystem Architecture, something that Intel's Pine Trail appears to aspire to.
Like Pine Trail, the MediaGX CPU runs on motherboards specifically designed for it because of the high level of integration between the processor and the chipset.
Intel won't be able to buy Nvidia because of potential anticompetitive concerns that might arise and it can't buy AMD for the same reasons. However, it can make life very difficult for Nvidia, the same way it pushed IDT, Nexgen, Cyrix, VIA and other x86-compatible processors into oblivion.
The Pine Trail concept will eventually make its way to the lower end of the desktop market and will make way for Intel's Larrabee sometimes in the future.
Alternatively, AMD will be rolling out its Fusion technology which combines a CPU and a graphics processor unit on the same silicon.
This leaves Nvidia as the only one without a viable integrated CPU+GPU or a hybrid GPGPU solution that is compatible with x86 environment for a foreseeable future and that is a pretty vulnerable situation to be. Bringing video features on the processor itself removes the need for a separated PCI-e port, which means lower costs, smaller form factor and ... the impossibility to upgrade at a later stage.