For a long time, you only needed a dedicated graphics card if you wanted to play the latest 3D games or for specialized work, such as CAD. When Windows Vista was released, the rules changed. At the time of Vista's release, only the newest integrated video systems could handle Aero. You needed what was, until then, a gaming video card for a good experience in Vista.
Computer hardware advances, of course, and now even inexpensive computers come with integrated video that meets Aero's requirements. Consumers evidently believe that their existing video performance is good enough, because in a release today a research firm announced sales of GPUs have fallen by drastically.
The release from Jon Peddie Research states that about 72 million GPUs were sold in fourth quarter 2008, down from about 101 million GPUs sold in fourth quarter 2007. Some of the likely causes for the decrease are obvious; the economy certainly isn't helping, and laptops are selling better than desktops. Because laptops usually only have one GPU and it's generally more difficult (or impossible) to upgrade a laptop's GPU, more laptops means fewer GPUs sold.
Unlike Vista, Windows 7 probably won't give many people a good reason to upgrade their video cards. Windows 7's beta performs well even on netbooks with low-end hardware. Windows 7 might get some gamers to upgrade as it will bring DirectX 11, but many of DirectX 11's new features are compatible with DirectX 10 hardware (and you can't really credit Windows 7 with DirectX 11, as it will also be available for Vista).
Gaming still seems to be the best hope for GPU manufacturers, but PC gaming doesn't seem to be doing well (aside from one 11.5-million subscriber exception). Microsoft claims to be committed to PC gaming, but the team behind the venerable Flight Simulator games was laid off last week.
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