Its PC-centric microprocessors have been successive optimizations of the same basic design. I expect a gradual decline to a low point where drastic changes in leadership, mindset, and business model will be needed to revitalize the company. A recent article in Forbes lightheartedly suggested that Disney's Michael Eisner consider relinquishing his post to Steve Jobs. You are absolutely right about the important 'embedded systems' market. Similarly, Lucent and Nortel keep referring to voice while knowing that Internet data traffic is catching up on them.
Success can be a pain in the neck.