First of all, if Intel + AMD's integrated graphics on the CPU suck, then NVIDIA's niche will not be only high end, it will be mid range too. But AMD is definitely going to support its discrete business, its making them money, its a great product at the moment. Intel, well its safe to say all their products absolutely suck. But, Intel has massive "persuasion" when it comes to spending millions "convincing" companies to support Intel products.
Secondly, while integrating CPUs and GPUs will be possible, you will not get two high performance parts combined into one, ever. NVIDIA has a current answer to that, GPU in the chipset (the venerable ION/MCP7A chipset driving many Atom-based systems, and _every single shipping Apple machine_ (paired with dGPUs in higher end parts), and while in the future they will have issues on the Intel front with legal issues, they will definitely find ways around it (pushing Tegra probably).
Why is NVIDIA's outlook not too bright? In all honesty, how often does not having an open source driver impact your average Joe? Virtually never. How useful will an entirely open driver actually be for the majority of Linux users? Have you ever looked into a graphics driver? Think its easy to tweak and fix?
Their driver support on Linux right now is pretty damn solid with their blob. In most cases, it just "works". And yes, there are cases where it does not, but you give me any piece of software for Linux, and I'll give you a case where it doesn't work. Opening the source will not magically solve this issue.
The real message to gather from TFA is all those wonderful references to the fact that WORKSTATION LINUX IMPLEMENTATIONS MAKE NVIDIA MONEY. Lots of money. A lot more money than your friend buying a 9400GT to throw in a *nix-based HTPC. They are going to go after that market, first and foremost. Guess what? It's working. The Quadro lines are the only viable workstation choice for Linux CAD/DCC, and CUDA on Linux is sweet too.
AMD/ATI tried to push this entire open source movement, but its really hurting them. If they put half of that effort to making their driver rock solid in linux as a BLOB, they could really push into the market with their amazing 5xxx line of cards.