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Owen wrote: And Intel aren't more profitable than all the other CPU makers combined. Samsung and Toshiba - 2nd and 3rd place in the worldwide semiconductor ranking - have a combined revenue from semiconductors alone that is higher than Intel's.

Revenue != profits.
Intel has a 50% profit margin. Half of its revenue is profits. All the rest of the manufacturers are creating what are called "commodity" chips. Most of the companies are barely breaking even, at best. Many chipmakers currently have negative profit margins, and profit margins are declining worldwide.

In fact -- new financial news from today: Toshiba now has a negative profit margin.

The rest of the chip industriy's profits easily outstrip even the combined total of Intel and AMD. And remember that Toshiba - like many Japanese companies - are absolutely huge conglomorates.

But most importantly - remember that 32/64-bit CPU design these days, outside x86 space, is mostly a 3 horse rase between ARM, MIPS and Power.org. And Intel simply can't create a CPU which does as much as any of them do, which takes as little die space or power, for less than they do. x86 is just too encrusted in cruft for it to be feasible. Many applications still use small, custom processors specifically engineered to purpose - for cost reasons.

Intel and AMD have a duopoly on one area - high end computing. The low end is dominated by the likes of Freescale, Microchip, Renesas, NXP and Atmel. The very high end is much more varied - IBM, Intel, AMD and whats left of Cray all compete in this area. The current top supercomputer is a mixed AMD64-Cell design by IBM.

And while some of the chip makers are loosing money, many are still making a profit - TI, Microchip, Renesas. Microchip's R&D expenses could be reduced to zero and they'd still make a profit for the next 10 years, because what they produce cannot be made better - the applications for many of their chips will never go away. As for TI and Renesas? Their market is still growing.

The x86 will never dominate the market. Never has, and today, with all the bloat of 36 years of backwards compatibility (right back to the 8008 in source form), it just cannot be stripped to compete.

I think the question "who dominates" cannot be answered that simple, as it highly depends on the domain. Having a look at TOP500 list of supercomputers you will immediately see, that Intel and AMD are clearly dominating the area of high performance computing, because they offer best performance - cost rate (this is also why Apple switched from PowerPC to x86):

369x Intel EM64T
60x AMD x86_64 --> 429x x86 64bit
60x Power
9x Intel IA64
1x Sparc
1x NEC Vector

You won't find MIPS or ARM at any time in this list, because its not their domain. Or another example domain would be enterprise-class servers, which are delivered as OS/Hardware bundles. There you will find

PA/RISC and Itanium machines running HP-UX
Power running AIX
Sparc running Solaris
or even AS/400 running OS/400 (ok, mainframe not server)

last but not least: x86 running several OS.

In this domain x86 takes 30 to 40%, which is enough to say x86 is not unlimited leader. Again no MIPS or ARM. But when it comes to consumer, entertainment or networking electronics you will barely find Sparc or Itanium. This is where ARM, MIPS, AVR, ... come into play. And Desktop market is a clear x86 domain.