PowerVR better align themselves with someone powerful or they will also die.
A strong partner that is willing to invest heavily is a major presupposition for their possible success in the PC standalone graphics department. Yet since it's not the only market they address I don't think absence from that particular market would signify any "death" apart from that market only.
I'd dare to speculate that their revenues in terms of lisences/royalties would be times higher from other markets than a PC graphics card. Simple logic a PC product is usually one partner; how many partners are there already for PDA/mobile and in extension how would that possibly translate into lisencing/royalty income?
What if VIA bought PowerVR? I think that would be a winning combination.
Last time I heard rumours about a possible negotiation for a
partnership with VIA, there were also some rumours about VIA insisting to write the drivers....errr no thank you if that should be true.
Despite that VIA has already S3 under the hood.
Overall I'd think that with a large enough partner that is willing to invest and stay, they'd manage to re-enter the PC graphics market, yet I'd think it would be only the first step. Whoever the partner I'd say that thinking of a 3rd contender with just one attempt is pretty bold IMO.
If we'd be talking about a continuing presence in that market with frequent releases, then after N time period the potential for a real 3rd contender on all fronts would be there; and I'm clearly not talking about just one generation.
Finally if there would be ever anything for sale then it would be Imagination Technologies as a whole, I doubt they'd ever chop off just PVR, especially since I have the feeling that development and patents are in fact somewhat shared between divisions. How are you going to sell one subdivision when products X,Y,Z contain let's say Metagence or Ensigma IP is beyond me.
As for the initial question, I'd say that both ATI/NV are determined to remain as competitive to each other as they currently are. There neither continious success or failure is guaranteed at all times. I guess we'll find out coming next year after 3rd party testing/analysis of future products and not some funky speculations on possible specsheets. On paper anything looks impressive...