Its similar to a discrete class gpu in a laptop which is just a glorified integrated gpu with RAM included for it.
Pretty much on par with an ATI HD3200, which could run Res Evil 5, GTA4 and Crysis on low-medium settings, and or lowered resolution. Which is pretty much what you get on a 360. Compare Res Evil 5 on 360 to a PC with dedicated video/DX10 and the difference is staggering. Just like comparing discrete to dedicated.
The main thing though that puts it firmly not in dedicated class is no dedicated RAM, but rather shares it with the CPU.
I think console GPU's have always been like that though, so it's nothing new.
At least the developers get to dictate where the ram goes with the Xbox 360. I remember reading that the PS3 is a strict 256mb for CPU and 256mb for GPU and you can't change that. _________________________________________________________
All use onboard, mainly due to cost since consoles are sold at a loss and a good video card costs what they sell a 360 for. Although it is entirely possible to have dedicated at a budget price, a 55xx series ATI card only runs about $50-70 and can easily run the games on the current round of consoles. Personaly I want to see a low-profile dedicated video card in the next gen. Its pretty much required if consoles want to truly stay competitive with PC gaming and not get left behind.
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