Integrated graphics' market share increasing
This story over at DigiTimes speculates that, by the end of this year, integrated chipsets that include on board video will make up more than half of the market. Integrated graphics chips generally aren't powerful enough for even casual gamers, but mainstream customers just looking to surf the web or do a little word processing aren't nearly as picky about pixel-pushing power.
Given their price/performance ratio, the integrated chipsets have inevitably started affecting sales of medium-range to low-end graphics chips. Facing the growing competition, graphics chip designers as well as card makers have tried to consolidate their market shares by cutting prices, in particularly in the China clone market, where demand remains relatively stronger.
Honestly, I don't see how NVIDIA's nForce2 or Intel's 845GE will be able to cannibalize sales of medium-range graphics chipsets, but it's clear that they've already had a significant impact with the majority of the market whose main concern isn't frame rates in 3D applications.