The papers today are yaking about rumours of an Intel/Nvidia merger and how it is going or how it is not going to happen.  An Intel/Nvidia merger would certaintly POUR cold water all over anything that might be smouldering in the ATI/AMD merger.  But, Intel has made acquisitions of graphics companies in the past and not much has come out of it ... it quietly died inside Intel as key people from the acquired graphics company quietly migrated out.  Would acquring Nvidia make any difference? 

Nvidia is the biggest winner of the ATI/AMD merger!  The destruction of ATI relationship with Intel is complete with the ATI/AMD merger.  Note that ATI and Intel got a lot closer after CEO of Nvidia was on a major cover of a major business magazine quoting how much Microsoft is paying for graphics compared to microrocessors for their XBox.  A year and a half later, ATI was first to market with a full PCI-Express solution (an Intel initiative) while Nvidia came out with a patch work. When Intel exited the integarted market, ATI was the shoe-in for the Intel customers left out in the cold (something Intel customers of non-core microprocesor products are familiar with going back to the i910 days - not sure if that is the right number as it could have been i920 or something ...heeheee...I am getting old and my memory is failing).  I can only imagine the relationship between Intel and ATI to head south from this point on.  Nvidia stands to reap the benefit as the choice supplier of graphics solution for the Intel platform. 

ATI and Microsoft have a great relationship as ATI is the sole and prime graphics supplier of the XBox360.  I see this relationship as a competitive advantage for ATI as they wold be at the fore front of DirectX development, a critical technology defining component for PC and console graphics.  But, Microsoft would now have to pay more attention to Nvidia as they are now position as the only independent graphics vendor for Intel PCs.  Advantage of having Microsoft in your back pocket is now gone for ATI.  Things can only get better for Nvidia as recent Microsoft announcements would indicate.

The question now begs "Why? merge with AMD?"  Is ATI feeling the heat of keeping up with graphics against Nvidia.  I suspect not.  These two companies are from the same cloth...SGI.  All the engineers from the world leading graphics company, Silicon Graphics Inc., are now in these two companies.  No, ATI is equally as competent in the art of 3D graphics as Nvidia.  ATI announced reaching 100 million mobile phones in the last year, which aprroximately represents 10% of the mobile phone market...a very impressive accomplishment.   On top of that, ATI announced the acqusition of a small mobile graphics company that brings along Nokia handset business.  Tack this on to the Qualcomm and Motorola business and youwould ahve a pwerhouse in mobile graphics, which is the fastest growing technology segment in the world.  Nvidia has nothing to talk about and their mobile customers are not a happy lot.  So, why? why? why?

There are many theories and only Dave can answer the question "why?"  I can only think that running a huge public company that is constantly under the GUN to deliver never ending growth is a stressful thing.  Yes, AMD is trying to get into the mobile market with SOC (system-on-chip) products and ATI would certaintly round off their technology component nicely.  But, would it not be cheaper to license or do a joint-venture?  We may never know the real answer but it sure looks like a sellout by ATI management cause I do not see any problems with ATI.   Than again, I am not inside ATI where the picture may not be as rosy as I painted it

In conclusion, as a hardcore gamer, I really see no major difference between ATI and Nvidia.  You reach a point of diminshing returns.  Most consumers would be happy with either product for their gaming activities.  There is a certain lost from the ATI founders in the sense of jobs that will be lost and a great Canadian company gone.  The success of being a dominant supplier to the mobile industry is a pipe dream.  The players in the mobile industry is acutely aware of the dynamics of the PC industry and would do everything in their power to prevent such a monoploy (Wintel).  Samsung, Motorola and Nokia have their own agenda and I can say seeing an Intel look alike in the mobile industry is not going to happen.  Good Luck, Dave and Hector, on the merger.  If there is a will, there is a way.  Prove me wrong.