Yeaah, Mtrox was doomed unless they bet it all n performance 3D. It was fairly easy to release a card competitive with 3DFX, but taking it to the next level with T&L and competent performance was a task too hard for most companies.
between 1998 and 2002, six "competent" consumer 3D companies were completely plowed-over by Nvidia:
Rendition
3DLabs
3dfx
S3
Real3D
Matrox
Because doing more than basic 3D takes some real engineering talent. That's why ATI's purchase of ArtX was so important, because Nvidia already started with a few SGI engineers (who knew what lighting and effects were). And 3dfx wasted their SGI talent, until Nvidia bought them.
http://boards.fool.com/battle-of-the-ex-sgi-engineers-10143854.aspx
It wasn't new technology, just new for the consumer space. SGI didn't know how to manage that transition, so they bled engineers and eventually died.
Nvidia and ATI didn't really start innovating until DX9. Everything prior to that was available on professional cards in the 1990s.
Well it wasn't just Matrox that failed, nV almost failed too, they took the wrong direction and didn't realize RAM was going to drop so much in price. They went another route with nv1 and of course MS went a different direction than nV with Direct X which helped the commercialization of RAM to the masses. nV was close to bankruptcy before they released TNT card. After that they really had no issues till FX series, which again almost brought them under, of course that was due to ATi, but after than there was no looking back, nV pretty much kept their performance crown or tied with ATi/AMD and always had marketshare above 50%