I see the changing direction in the graphics stack as a response to market changes, rather than the other way round. I think there are two key factors :
1. Improvements in hardware power/performance and battery technology are making mobile computing more interesting. Mobile computing brings new screen sizes and interaction models which make compatibility with existing applications less of an issue, and Linux seems to be pretty well positioned for smaller devices.
2. Improvements in network technology, server price/performance and web application technology (along with increasing maintenance/support costs) are driving IT departments towards more server-centric models, and this makes it easier to use Linux in enterprise client systems.
So yes, I see increased company interest/funding but as a result of market changes not technology changes. This has been happening for a couple of years now.
Do people really think Linux isnt' used in desktop market like windows/mac because of X?
Sadly, plenty of people really do seem to believe that. 'If only we could replace X with some fancy new buzzword-compliant technology, we'd own the desktop market!'
Mostly because they don't understand X or why it was developed, or why it's superior in many respects to the competition. Or, for that matter, why it's survived twenty years without someone throwing it out and replacing it.
Right. Some days I think the real complaint is that "X hasn't been turned into something that is so obviously superior to everything else out there that developers flock to Linux just because the graphics stack is so freakin' wonderful"
Personlly, I think there are a lot of reasons why more companies don't contribute do Xorg.org:
1- Linux Kernel: The Linux Kernel is relativelly fast and snappy when we talk about perfomance, but, currently, is also a big mess, mainly when we're talking about the kernel graphics stack.
While current OS (open-source) drivers have some leading features such as KMS, Power Management, or even video acceleration (Intel), we can see, by another side, proprietary drivers' companies (ATI and nVidia) don't want to change to KMS with their drivers.
2- Xorg Server ABIs: Personally, the major mess here. A new Xorg Server version, a new ABI; Then, proprietary drivers don't work (this happens a lot with ATI's Catalyst driver).
3- The "Open-Source" model of Linux: Some companies are resilent in "losing control" on the code they create, with fear that "hackers" might change the code of their programs (but that doesn't already happen in Windows, when people play cracked games?)...
5- No DirectX direct support: Bad DirectX support in Linux (except with Gallium3D or Wine (until DX9)). We've got OpenGL support, but the API is a bit complex for most game developers, when mostly of them are using DirectX... That means a lot of costs (changing from DirecX to OpenGL programming, and a lot of lost time in developing new gaming apps). Futhermore, because DirectX is a proprietary API, it gives more control of the code to the companies (not for the users, of course ).
5- Xorg is an relatively old application, with lack of documentation and is hard to code. I'm hoping Wayland solves some of the "problems" Xorg has...
Futhermore, there's still some "hacker culture" in Linux that uninvites game developers' to create games on Linux.
Probably companies planning on making money with embedded stuff or fancy, 'snappy graphics effects' (shuttleworf) feel they can't do it with X and invest in Wayland.
Companies making their money in the productivity desktop/server market (like RedHat) probably don't see that any shortcomings of X would be limiting their success in the short/mid term. Prolly because X simply works, and other parts of the graphics stack are much lower hanging fruits to improve the user experience.