GPUs as processors
Since the compute engines on GPUs could handle the entire graphics pipeline, it became possible to render realtime displacement mapping. Eventually, the GPUs grew sophisticated enough for Havok to port the Bullet real-time physics engine to the GPU.
At that point, developers were treating GPUs as co-processors. Programming languages like CUDA, OpenCL, OpenGL High-Level Shading Language, and the DirectX Shader Language allowed programmers to write portable programs for GPUs, and CUDA and OpenCL removed the graphics-specific limitations.
Now, GPUs had become essentially compute co-processors for personal computers.
Crunching the chip market
The limiting factor in gaming performance wasn't the host processor any longer, now it was the GPU.
The result was that maintaining high prices on high-end x86 processors has been increasingly difficult, especially since clock speeds aren't going up significantly, thanks to thermal limits. Meanwhile, higher performance GPUs in increasing demand.
Intel clearly sees this trend also, since they began developing a massively parallel computing platform based on stripped down and optimized x86 processors. nVidia and ATI pack their GPUs with legions of processors and rely on the programmers to write optimally parallel code, which most don't know how to do. Intel is relying on a smaller number of cores and an easier programming model to enable programmers to get higher performance with less effort. So far the jury's out on how well this will work out in practice, but the fact remains that even Intel is looking for new markets where they can command high margins, while its x86 host processor family still has high enough margins to keep Intel's revenue stream alive.
The consumers clearly are gaining from this, and in more ways than just more powerful computers, more beautiful and immersive games, 4K video editing, and the like. This trend is also making the x86 less important for a personal computer, thereby opening the door for companies like nVidia to move upmarket with increasingly sophisticated ARM processor designs.