Its obvious that their big core line is completely dead. And the cats family already seems to be in trouble.
I see no evidence that the cat cores are "in trouble". They are reasonably competitive with Intel's Atom line. And they already have two major design wins (the consoles). If anything, it's likely that the cat cores represent AMD's x86 future - just as the Pentium-M line did for Intel during the dark days of Netburst.
But at that time the dGPU is close to, if not already gone.
This is a pipe dream. Never gonna happen. There is really no such thing as "good enough" when it comes to GPU power - no matter how powerful iGPUs get, a discrete chip on the same process node will always be better. And with GPGPU computing taking off, it's not just gamers who need good GPUs, but professional users as well. It's these pro-grade GPUs that really pay the bills for R&D, and will continue to do so.