First you forget this are technical forums and so it is possible to talk about engineering which you seem to have problems with, but you have no problems with economics, as if all this isn't related.
I have no problems discussing die sizes. It's you who said a card with a larger die size and similar speed is a turd. I provided GTX460 and 8800GT as examples of excellent cards. Larger die sizes than AMD's 6850 and 3870 and far more successful videocards.
By the way, AMD did make a slightly larger 3870, called the 4870/4850 that beat the 8800GT senseless
Are you serious? To prove your die size point you use a 55nm next generation architecture HD4870 (there were major redesigns for AA shaders among other things in that architecture over 3870) to compare to a mid-range G80 65nm 8800GT to show how AMD is able to make a better card at a smaller die?
Your key point that AMD's engineers are "better" because decided to make a smaller GPU is odd to be honest. You make it sound as if NV's engineers don't have that ability or failed to consider that NV deliberately decided NOT to make small die GPUs because it makes no sense for them.
If NV makes a 500mm^2 GPU that has better price or performance or price/performance than a 300mm^2 AMD card, that's what that matters and what sells cards. Yes, sure, AMD's engineers made a more efficient GPU. So what? If it doesn't sell better in the market, makes more $ for AMD, gains more market share, it's ONLY a check-mark achievement for engineers. The engineers should pat themselves on the back and next time make a larger die card to actually beat NV because outside of the APU market, not many people care that they made a more efficient GPU that ultimate lost. It would only matter if they won (financially, market share, brand recognition, etc.).
If right now AMD released a 550mm^2 HD7980 with 40% more performance than HD7970, you'd call that a failed strategy?
The point of the matter is consumers compare cards based on price, features, image quality, performance, not die sizes.
If you want to discuss the merits of engineering, AMD currently makes more efficient GPUs per mm^2. That's not something to argue about -- that's a fact until NV releases something more efficient. But in any given generation, NV always has similar cards to match AMD in terms of price and performance. So essentially, while AMD has more efficiently engineered GPUs,
it means squat in the end. Sure, their engineers have thus far made more efficient desktop GPUs. As I said they have to because of the APU strategy. So what? What has their "superior" knowledge of making more efficient GPUs done for AMD on the desktop market? Not much.
Is a 6.3 Litre supercar (Ferrari F12) worse than a 3.8 litre twin-turbo supercar (McLaren MP4-12C)? They achieve similar performance but use a different approach to engineering. In your world the more efficient one is always better. Black or white?
You make it sound as if a small die GPU is some advantage. In what way exactly? To say that AMD's engineers are "better"? That's your main point? Did it ever occur to you that NV and AMD engineers leave and work at each other's firms and that the GPU design direction is simply different? Why would NV (Ferrari) decide to stop making 6 Litre engines when it worked well for them all these years? Why would AMD (McLaren) decide to start making large engines when making small engines worked well for them?
See how the engineering design choice does not in any way imply 1 is better. They are just different. Small vs. Large die strategies are just different. But so far NV has executed it much better, made way more $ since G80, has 63% market share in discrete GPU segment, which leads credence to the fact that small die strategy hasn't lived up to the hype on the desktop.
NV could have easily done the same in 2007, but obviously they went with a large die strategy
at the time because it made sense for them to focus on what they are good at = making massive powerful GPUs to service GPGPU, gaming and professional markets.