Intel conducted the first-ever demonstration of its massively-parallel Larrabee GPU yesterday at the Intel Developer Forum.

Larrabee is Intel’s first foray into discrete, or standalone, GPUs in about 10 years. The new design is said to use an array of x86-compatible execution engines which are harnessed to crunch data in parallel. Intel hopes to leverage this architecture to compete directly with ATI and NVIDIA in gaming, and later in other markets.

At hand, the IDF demonstration called upon their GPU to render Enemy Territory: Quake Wars with ray tracing. Ray tracing is a rendering technique that accurately imitates in 3D the real world interaction between light and objects. This gives scenes rendered via ray tracing a very high level of photorealism, but it has traditionally come with a heavy performance penalty.

The water in the movie, says Intel senior research scientist Bill Mark, was done in real time with just ten lines of C++ code. The same effect with today’s rendering technique would require a lot of  “cheating” in the form of textures, pre-rendered elements and lighting tricks.

Ray tracing is still too slow for 30-60 FPS gaming, but empowering developers with a platform that emphasizes it might make it viable in a few years. Should that happen, the days of depending on the skill of a game engine’s developer to produce outstanding lighting just may be numbered.

Products based on the Larrabee architecture are on schedule for a launch in 2010.