Nvidia is learning one true fact of life – Loyalty is a four letter word for Microserfs. After breaking its back and coming up with a chip that launched XBox, the graphic chip maker recently lost the bake-off to arch rival, ATI Technologies.

The results of the bake-off were no surprise for anyone. Dean Takahashi of San Jose Mercury News has some juicy insider stuff in his report. He incidentally is the author of Opening the XBox

bq. That was partly because Nvidia and Microsoft were locked in a legal arbitration over the pricing of Xbox chips that finally resulted in a settlement earlier this year.

Or as the Merc puts it: it is Canada 2, Silicon Valley 0