We won't know whether Larrabee was a screw-up until we see how successful Knight's Corner is. A lot of groups are currently running prototypes under NDA. It's a programming model debate as much as anything, the hardware capability is available in both models.
It was an epic screw-up to position it as a head-to-head competitor with NVIDIA and ATI for Direct3d. They should have positioned it as an HPC chip from the beginning and then perhaps later said: "Oh, btw, it has these texture samplers, so let's make a video driver just to see how this CPU of ours compares to GPUs for gaming." That would have set expectations at a much more realistic level.
