[agapos]

As I know, it went something like this:

-Both wanted x86 for better usability (PS3 Cell was a hard-to-tame beast for many devs, ARM not strong enough)

-Intel was not interested in manufacturing semi-custom chips

-Nvidia simply did not have x86 licenses

-AMD was left as the only option

Of course other things also factored in the big picture, profit margins for example, but those are more known.

[Narishma]

They didn't necessarily want x86, it just happened that that was the only sensible option available at the time. What they really wanted was an SoC or APU as opposed to a discrete CPU and GPU, as that is a lot cheaper. And as you say, Intel is too expensive and has no good graphics, Nvidia only has ARM which isn't powerful enough, and IBM doesn't do graphics nor SoCs. Which left AMD which has good graphics, ok CPUs and the experience to put them together in an SoC.