S3 would make more money selling these ~$70 cards than rushing into the high-end segment...which would require tons of money invested in the R&D, initial production and distribution. But yes, the company has the potential. While it would be a little unknown to the west, VIA has made lots mot money selling inexpensive chipset, the order here is: "Have Celeron/Sempron, buy VIA chipset based boards".
All in all, if the company can master selling to one segment of the market, it can survive and grow. The S3 Chrome S27 was a nice product, just that it wasn't properly marketed/sold...it at least translated its paper specs to real performance better than an ATI card of its segment did at its time.