S3 has already conceded the high-end add-in card market to NVIDIA. Paul doesn't see a good time to break in until a year after the X-Box hits the shelves. S3 is working on a hardware DX8 core, but it won't be ready until next year. The core will make it into integrated and mobile products, but whether or not to make discrete add-in boards hasn't been decided yet.
While the DX8 compliant core won't be ready until next year, S3 should have DX8 compatible technology available this year.