For PC gaming, this week was the best of times and the worst of times—new graphics hardware on display from AMD and Intel, but aimed at an ailing PC gaming market that's in its worst shape ever.

At AMD's big VISION event earlier this month, the company gave a technical deep dive on its next-gen GPU family, codenamed Evergreen. The embargoes are now up on the technical details and reviews of the first product in this family, the Radeon 5870, an embargo lift that was no doubt timed to take a little of the wind out of Intel's long-awaited Larrabee reveal yesterday.

The verdict? AMD's debut DirectX 11 GPU now has the single-GPU performance crown by a comfortable margin, and with a significant timing lead on NVIDIA's upcoming DX11 hardware. A single new 5870 outperforms two 4870s, and without a major increase in power or cooling requirements. A 2X performance boost versus the previous generation in the same thermal envelope is quite an achievement, and it reinforces yet again the fact that the real action at AMD is on the ATI side of the campus.

As for Larrabee, Intel's Sean Maloney showed a real-time ray-tracing demo that seemed to run at somewhere around 25 FPS or less. The demo was interesting graphically the way that, say, solo bassist Stanley Clark is interesting musically—you're mightily impressed by the sight of something so difficult being done with such speed, but the end result isn't really the kind of thing you want to rock out to on a regular basis. The real-time ray tracing stuff just doesn't look that great yet, and it probably won't look as good as rasterized graphics anytime soon.

Of course, Larrabee will also do rasterized graphics, and probably about as well as a midrange GPU from ATI or NVIDIA. But running games that use the traditional rasterization pipeline isn't where Larrabee is designed to shine. Intel really needs two things to happen with Larrabee: 1) a killer app, like GLQuake was for 3Dfx, and 2) a console win.

I can't really speak to #2 (I think it's going to happen, but what do I know), and for #1, all I can say is that Tim Sweeney is pretty fired up about being the guy who codes that killer app. And what Tim Sweeney codes, the rest of the industry licenses.

All of this power and potential, though, is a moot point if game developers continue to target consoles and then port their games to the PC. Scott Wasson goes on a little mini-rant about this subject at the end of his Radeon 5870 review, and I also heard quite a bit about this problem from some other prominent PC hardware personalities at IDF.

Current PC CPU + GPU combinations are already at some large theoretical multiple of the performance of gaming consoles, but you'd never know it from looking at 3D PC games, all of which are written with the console market in mind. It's to the point where there's almost a chicken-and-egg problem, where nobody shells out for a PC gaming rig because the games don't look that much better than their console counterparts, and nobody develops PC-only titles because gamers aren't shelling out for PC gaming rigs. All of this is compounded by the downturn, which has hit the high-end GPU market especially hard.

I'm personally coming around to the idea that something like OnLive/OTOY/Gaikai is where the market is headed, because when the client market totally dries up there will be a "game server" market for GPUs waiting in the wings, and GPU vendors will push it like crazy. But that's a topic for another day.