For AMDs sake they performance of the GF100 won't be a problem for at least a quarter as getting any significant quantities to market will be troublesome. At this point the question is how long until the GF100 derivatives get to market in quantity, which is where the majority of their volume and margins are made.
On the laptop side, they probably have Q1, Q2 and likely Q3 locked up because they got their products to market in time for the laptop manufacturers and because of the long lead time for laptop makers for their designs. On the desktop side they probably have Q1 and Q2 locked up in their favour because even if they cede the high end, being first to market with volume product DX11 won't be countered for a while by any competing desktop products. That leaves Q3, but if they can get their new architecture out this year it won't be too much of a problem.
Oh indeed, I think even if Fermi blazes the trail and outperforms 5970 it won't have much of an impact as the chip will probably be in short supply for quite a while, probably for the whole if its initial existence as a 40nm part.
The point you make about mainstream parts is important on two fronts, one as you point out they make up most of the dollars spent on discrete graphics and therefore the profit to be earned. Second is the timing, you say Q3 new architecture (as opposed to refresh), it would be very difficult for ATi to introduce a volume product on 28nm on a completely new architecture in Q3 (when TSMC say they go into phase 5 production) even on a refresh it would be quite hard and maintain reasonable yields/costs. If Q3 is their stated goal [for a refresh] it would make sense to do 40nm at massive volumes/high yields (which are apparently available now) and wait until Q1/2 2011 for a new architecture on volume 28nm. Add in that Nvidia are probably hammering TSMC for all of their 28nm availability right now (maybe even willing to pay a lot per wafer, more than ATi at least) because the attraction of moving down to 28nm must be huge for Nv given the heat/size/cost concerns Fermi has.
It wouldn't surprise me if Nvidia's mainstream part never makes an appearance at 40nm being 28/32nm only, with reportedly poor yields at 40nm for GF100, the mainstream won't be that much better, not double anyway. So moving to 28nm and riding out the storm of little availability in Q4 whilst denying ATi 28nm for all 2010 would be a something I would pursue as Nv.
Basically, it looks like GF100 is so uneconomical right now even paying over the odds for 28nm per wafer might be cheaper for Nv per usable die and give better heat/size/cost than 40nm. While Cypress is anything but uneconomical and competing with Nv for 28nm on Nv's terms probably won't suit them, not until volume outstrips supply early in 2011 and TSMC can give lower prices.
Though I wouldn't advocate that ATi sit back on the success of Cypress and the apparent failure of Fermi, it looks like they can rake in a lot of dough between now and Jan 2011 and move to 28nm with a brand new architecture fully tested and ready for mass production while Nv are struggling to make 28nm work on the current architecture.
I don't know, just thinking out aloud...
