This was needed. Im sure that if they had they way they would have purchased Nvidia, but as the story says they had to borrow money to buy ATI, before it was around 3.9 billion. If the same thing occured with Nvidia the price tag probably would have been close to 10 billion.
Anyhow this takes care of two issues that Intel has over AMD, one central location to get everything from the chipset to the processor and it also gives AMD a potential edge in technology. Its been rumored for years that AMD wants to extend the Hyper Transport bus to include video cards, physics processors, math co-processors and etc.
Lets take 4x4. What if it could actually take a quad core processor in one of the slots and the other slot could take a physics co-processor? If people were paying attention before ATI's potential solution was different than Nvidia's whos solution was to only accelerate non gameplay options such as cloth and water because everything else requires CPU assistance which would be hard to coordinate with the GPU. its possible to accelerate more on a faster bus than what PCI Express can provide.
As far as Nvidia going to Intel's side, I kind of doubt it. I think Nvidia went more with AMD from the jump because they happen to have a bunch of old AMD engineers on staff, similar to how back in the day OGL ran better because of the old SGI engineers on staff. Unless the AMD/ATI team starts to eat major marketshare Nvidia's major concern is Intel which has 60% of the video card marketplace. Expect ATI to focus on the intergrated market and Nvidia to stick with the enthusists market at least for the time being.