Both autos becoming much more efficient, but the second reason I'm pretty sure is that we're all big dumb lazy americans. Only 2% of the new car market is for a "sports car" and even then not everyone wants a traditional manual.

Cars like the E46 M3 with the SMG and paddle shifters are cool, but in turns, the paddles are pretty much useless. Also, the SMG I drove felt like a girl was operating the clutch for me...sloppy, wrong, and miss-timed. I actually prefer the Z4 auto with the paddle shifters in that in my experience, it shifts faster, more smoothly, and just all around better.

Admittedly the Z4 was a newer car (05/06) and probably hadnt adapted to the driver whereas the M3 was an 04 and definitely already had.

I think that manuals will end up sticking around because they are plenty lighter (plus no need for transmission cooling), tend to get better mpg, and have the auto start/stop function on the new MINI, 1 series etc.