I had faintly heard grumblings of Intel loathing Nvidia, but I didn't really put 2 and 2 together until listening to Gordon Mah Ung on this week's No BS Podcast.
Good ole' Gordo spelled out why Nvidia ultimately acquired AGEIA - because Intel deep-sixed Havok's use of GPU's that had been in development for several years. While Havok was an independent company they worked with both ATI and Nvidia to support GPU processing of their physics API. Once Intel bought them the interoperability was tossed in the trash. I'm sure this was a pretty big dig at the GPU makers.
So Nvidia purchases the #2 player in the market to ensure this doesn't happen again. Let's see who enjoys the #1 spot in shipping titles during Christmas of '08.