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Well there would be kind of a monopoly in the consoles space on graphics hardware, that would enable AMD to try to marginalize Nvidia in relation to other players in the game's industry. Well, on the other hand, if based on the product offering and perspectives, ATI is the current logical choice, then Nvidia lost a battle and they would need to come up with some thing really good. But I doubt Nvidia would let that happen.
Don't forget that if AMD is in the lead technologically for a few years, it starts to lose pace in innovation.