At that price, however, integrating the graphics accelerator with other necessary subsystems is a better plan. This is the theory behind Cyrix's successful MediaGX and forthcoming MXi processors. This combination leads to good graphics performance for moderately priced PCs. Videoconferencing, the next most likely use of such systems, needs a decent CPU but benefits little from 2D or 3D acceleration. Once Intel has been through one or two generations of graphics chips, it's likely to begin exploring integration options.
Core logic is a logical place to start, given the company's dominant position in that market.
Adding a 3D engine to the north bridge would have several benefits. The graphics chip would have direct access to the CPU bus and memory controller, which would boost graphics performance. Eliminating the AGP interface and an extra package would reduce pin count, board space, and layout complexity, leading to a significant drop in overall system cost. The major drawback of this combination would be a loss of OEM flexibility, but Intel would presumably continue to offer discrete core-logic and graphics chips. SiS, for example, already has both core-logic and 3D products and might be able to integrate the two functions relatively easily.