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Larrabee no more needs to beat the highest-end nVidia or AMD GPUs in the hottest games when it comes out than the x3100 needs to beat nV/AMD notebook offerings today. What it needs to do is be (profitably) a good deal cheaper for X level of performance than the nV/AMD offerings.
To put it another way, if Intel can provide the same graphics power with Larrabees at half the chip cost of even lower-end nVidia/AMD GPUs, they may not get great reviews, but they'll have a real winner on their hands. Even if the first generation or two or three of these Larrabees aren't so good, so long as they're decent enough to be competitive in the low- to medium end, they can gut nVidia/AMD's lower-end product lines by making them unprofitable. Believe it or not, nV/AMD would go quickly broke if all they could sell was $500 video cards. ...
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Then again, while you can easily see why the two [Intel & Walmart] wouldn't be sure-fire winners in their new businesses, you probably wouldn't bet on them being sure-fire losers, if only because both have the wherewithall to keep at it and learn from their mistakes. Larrabee is not a one-shot deal, but a long-term threat. Even failure could be a success. Larrabee is really an excuse to practice designing and building many-CPU systems and get paid for it. If Larrabee fails as a video card, but Intel learns enough to make one of its children become the dominant tinyCPU in cellphones some years from now, would you call that a failure?
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