I honestly think that it was AMD purchasing ATi that is putting this hurt on them. Yes ATi is a great card company... or was, but since AMD took over they seem to have lost their edge. Not only that, ATi was an expensive purchase from AMD. They were trying to make them self a threat (a triple threat) but so far it kinda blew up in their face. I am hopping they are going through growing pains and that’s it. I do not think they are loosing as much as we think. They have 2 out of 3 consoles they are supplying for (Wii and X-box 360). Also, I have seen more stores (best buy, circuit city, Wal-Mart, more) selling AMD based computers like hotcakes (I don’t know why hotcakes sell so good. they are not that great).
But... they did kick themselves when they were down with Barcelona. The R600 was a dud, and their revision (the 3000 series) is just the same. Because they are much smaller then Intel, they can not take 1 failure, let alone 3 (Barcelona, R600, and the HD3000 series). They just do not have the cash or credit to survive under these conditions like Intel does.
I would love to see Samsung, IBM, SUN, or Bob Dole buy them out. Someone who would give Intel a great run for their money. They need to be bought out by someone who has the time and money to spend on R&D and can take a failure or to.