"I dare say that in two to three years time we will see something [using ray tracing from game developers]," Intel engineering manager Michael Vollmer told PCGH.
Ray tracing calculates how light interacts with objects, including proper reflections and shadows. The results are often described as photo-realistic (see example above), with the process used create computer-generated effects in films and television shows.
Intel had previously demonstrated a version of Raven Software's Quake 4 that utilized ray traced graphics, which some criticized for not showing a marked improvement. However, Vollmer noted that "a complete demo, which contains the graphical aspect, too, is likely to look different."
"Ray tracing [for games] is still in an early stage," he stressed, noting that though it has "all the basic features already, like shadow cast, surface reflections," the transition to a new technology is often slow and laborious.
I dare say shenanigans
I think what he is not saying is that at first it will probably be a combination of rasterization and ray tracing. Also a decent article on the two. http://www.pcper.com/article.php?aid=530 However take it for what you will. Remember that Intel is going to try and take a bite out of Nvidia's pie with the Larrabee.