That was tit-for-tat.
Just because Img Tech doesn't run along in the desktop PC space doesn't mean they don't have the technology to render shiny pixels for a closed box. Likewise, just because ATI/AMD and NVIDIA dominate the PC graphics space doesn't mean they can outdo everyone else in every space at every design point.
The PC market is very different from closed boxes. Observing that PowerVR has not (re-)entered the PC market and extrapolating from there that they don't have a competitive hardware architecture is short-sighted.
You sure? I have been quite sure that Sony fabs RSX and can have a peek inside, do shrinks etc, though obviously with some agreement in place that they will only use it to build the PS3.
Ps3 may have set specs, but it's a hell of a lot closer to a PC than it is to a cell phone. Your argument would be pretty good for say...PSP2 (though PSP already looks like it outdid powervr's handheld graphics from a company with no real experience in the field), but ps3 (RSX) is at worst at a midrange pc's performance level, with performance several orders of magnitude higher than anything that powervr has ever done, and likely has a much larger feature set as well.
What benefit does PowerVR get from PS3 being a closed box that Nvidia didn't? We know things were cut from RSX that were in the geforce 7 series, so it's not like nvidia was tied to every single feature its pc gpus had. I'd imagine it was a heck of a lot easier for nvidia to slightly scale down their chip for a console than it would be for powervr to take a cell phone chip, or maybe some geforce 6 level design hidden away in a lab, and scale it up for the ps3. Not to mention nvidia has a much better history of timely execution than PowerVR. I assume PowerVR wouldn't be building a custom design, because assuming even equal talent and past designs to work from, it shouldn't be any cheaper for powervr (with less manpower) to build a custom design than it would be for nvidia.