Discrete Graphics cards are niche hardware, but the niche isn't shrinking appreciably anymore. Intel doesn't seem all that interested in competing above the middle-low level of performance, nor do they put nearly the amount of effort into their drivers--which means more headaches when you try to push them hard. They're happy gobbling up the majority of machines where people don't give a shit about the graphics and let nVidia and AMD do the expensive battle to capture the enthusiast market.
This strategy did let them down in that it caused them to miss the opportunities for AI, cryptocoin, ML, and other such markets.
Its not the only time, that chasing fat margins let them down. They completely gave the smart phone business away because they didn't did the opportunity. Now they are looking at a half dozen companies from the ARM ecosystem that are hungry and looking to expand their market-share into servers.. Its completely possible that within a few years ARM CPU/GPU combinations will own a huge part of the computing landscape.
Its the same thing that leaves IBM sitting on the sidelines. An unwillingness to take a chance and invest in things where the margins aren't evident. Eventually someone shows up and invents a whole market (AWS for example) and makes a killing leaving them sitting on the side lines.
This strategy did let them down in that it caused them to miss the opportunities for AI, cryptocoin, ML, and other such markets.