AMD's Godfrey Cheng gives a view of the future of GPU market. He reveals that AMD's upcoming Fusion APUs are designed to be as fast as "some discrete GPUs", while featuring great GPGPU computing performance as well, but Cheng also points out that discrete graphics cards will not die anytime soon because APUs will not match the performance of higher-end discrete GPUs.
AMD Fusion APUs have not only been designed to offer great graphics performance, they also have been designed to offer great parallel compute performance. The fact that the CPU core resides next to the GPU core connected by a bus of mere nanometers, helps diminish the bandwidth and latency issues presented to parallel computing on a PCIE bus.
The design plan for successive generation of AMD APUs includes architectural innovation, as well as tighter and faster interconnects between the CPU cores and the GPU cores. One goal is to advance the parallel compute capabilities without sacrificing x86 and graphics performance.
So, to finally answer the question whether discrete GPUs will die, the answer is: Hell No.
AMD relies on our ability to generate world-class discrete graphics cores and then leverages them in our APU product lines. You should also expect AMD to innovate when an AMD discrete graphics is plugged into an AMD APU, the mythical word of “synergy” will be realized. We are expecting to improve both graphics and compute performance.