The wait is almost over. Nvidia’s ION graphics for netbooks will be available inside the new Lenovo S12 come August for $499. That’s only $50 more than the version that will ship with Intel’s wimpy integrated graphics.

The company has three goals in mind for ION, which is paired with Intel’s Atom CPU: Enable users to play mainstream games like Spore, the Sims, and World of Warcraft; watch high-definition movies (up to 1080p on a TV); and transcode video. In other words, as senior product manager Matt Wuebbling put it when we chatted last week, “ION turns a netbook into a notebook.”

Assuming Nvidia can back up these claims once the S12 becomes available, ION will be a disruptive technology in the best possible sense of the term. At a time when Intel and AMD are trying to get consumers to step up to “affordable” thin-and-light $600 to $800 notebooks powered by their ULV and NEO processors, buyers could wind up asking for cheaper portables with Atom + ION instead. Here are the highlights of our conversation with Weubbling:

• The reason that only the ION version of the S12 has HDMI is because only it is capable of outputting 1080p video, whether it’s ripped, downloaded, or through an external Blu-ray drive. However, ION won’t help when it comes to streaming HD video online.
• ION will allow users to benefit from graphics-accelerated video editing programs like vReveal.
• Although Nvidia’s GeForce processors are still your best bet for the latest 3D games like Far Cry 2, you’ll be able to get “in the mid 20 frames per second” at native resolution for mainstream titles like Spore, Call of Duty 4, and World of Warcraft. “You might see hitching or a missed frame once in a while.” The native resolutoin of the S12 is 1280 x 800.
• Wuebbling recommended this stress test for the GPU once we get our hands on the ION-enabled S12: “Play an HD or Blu-ray moview on the notebook with it connected to an external display at the same time you’re transcoding and you’ll still see perfectly flawless video.” He even said we could even surf the Web at the same time.
• Despite the fact that ION promises 10X the graphics performance, Nvidia claims that it should deliver comparable battery life to integrated graphics. According to Lenovo, the S12 should get 6 hours of endurance, so we’ll have to wait and see if the ION version fairs as well as the Atom-only version of that notebook.