They had an advantage of having a first generation unified shader GPU (the Xenos), look how their first DX10 GPU turned out.
Good point. Although they'd never implemented any of that technology in a discrete product before, coupled with a few poor design choices (leaky 80nm fabrication process, unnecessary 512-bit memory bus - as evidenced by RV670 (256-bit) and RV730 (128-bit)), numerous delays and a poor launch price not a lot really went right for the 2900 XT.
