Hi all, your friendly neighborhood AT editor here.
When I wrote that article, we had been expecting something decisive out of UT3 when it came to physics, based on the information that had been released up to that point and on the assumption that UT3 would sell like hot-cakes like every other UT game. What we got was entirely different.
First and foremost, UT3 has tanked sales-wise. If its existence was going to have any effect, with the sales that have actually happened there's no way it would significantly buoy PhysX hardware sales in the short-term.
Second of all was that we were looking for something decisive, instead we got yet another mixed bag. The performance on the AGEIA levels is interesting, the performance on the standard levels not so much. Epic did not integrate PhysX in to the engine as we earlier believed, the result was that we got some interesting results on one map (WAR-OnyxCoast, IIRC) and little elsewhere.
This basically puts us in a stalemate. We're not ready to write off the PPU concept yet, even the now-ancient PhysX-1 hardware produces some big performance boosts in AGEIA's tech demos; if it's used correctly there's promise for the hardware. But no one has used it correctly, CTF-Tornado is about the closest anyone has gotten, and that's another tech demo map.
We keep hearing about AGEIA shipping a 2nd-generation PPU this year. If they do that, it'll buy them a bit of time, hopefully in that time they'll find their killer app now that they've made something that gets the idea right and the APEX platform for Unreal Engine 3 will make physics integration easier for the many UE3 licensees. But if we hit 2009 and there's still no killer app, even if there was new hardware we'd be apt to write off PhysX after 4 years of waiting.