Matt: This is getting a bit off-topic, but I can give you my two-cents.

The user interest is there already. HL2 showed that plenty of people love physics in games and would be willing to upgrade their hardware to get the best performance. And developers are interested as well. The PC version of GRAW, City of Heroes, and many up-coming games will include PhysX enhanced versions.

API standard? The great thing about standards is that there are so many to choose from. If Ageia works as advertised and it wasn't so pricey, it would be a huge hit among developers. I'm guessing it is only a matter of time before Microsoft buys Ageia (or makes something like it) and DirectPhysics becomes the standard for games.

Installed base? This is the Catch-22 of all new technology. If Ageia gets ATI and/or nVidia to put PhysX on high-end graphic cards, this will take care of itself. In the meantime, PhysX works without hardware as well.

I'm not saying that PhysX is the future, it's going to take a lot of work and luck for them even to survive, but I don't think their idea is doomed.

But I think we are saying the same thing. PhysX is most likely going to succeed as part of the MoBo or video card.