Intel is pulling out all the stops to get its Larrabee GPUs inside Microsoft's next-gen Xbox (Xbox 720) or another console, according to The Inquirer citing unnamed sources.
As rumours go this doesn't sound too off the mark. MS needs a graphics chip for the Xbox 720, and Intel, along with NVIDIA and AMD, will have suitable parts available. The bigger surprise would be that MS refused to even hear Intel's sales pitch.
But the Inq has gone further to say that Intel is doing everything it can to table an deal MS can't refuse, going so far as offering to do the engineering work on thermal design (hopefully ensuring we won't ever see a repeat of the RROD nightmare), and is even prepared to hand over the rights so that MS can get the chip manufactured at any fab it chooses.
The main motivation behind all this for Intel is developer support. The PC graphics card installed base is dominated by NV with around 60% and AMD with 30% (according to the Valve Hardware Survey), and it's just basic economics that games developers will devote most of their resources to design and test their new titles on these two families of cards.