The tech news of they day (it actually broke last night) is Microsoft’s $7.2 billion takeover of Nokia’s mobile phone business. Given the market shares of the parties – both firms are niche players in the smartphone marketplace – there aren’t any regulatory wrinkles to speak of. While there are those who will seek to tack conditions onto any deal they can, there’s not much to hang them on so it’s best to examine it as a straightforward commercial transaction.

There’s a lot of grumbling on the Nokia side from folks who see it as a steal for Microsoft; 7 billion is a lot of dollars, but not so much when you put it in perspective: Microsoft paid over $8 billion for Skype, and Verizon’s buy-out of Vodaphone is going to cost $130 billion. A decade ago, Nokia was valued at $200 billion, but that was before Android and the iPhone, when Nokia had the only smartphones worthy of the name. Since then, Nokia has dithered around in the content and ring tones business and largely ignored the growing threats to their smartphone hegemony until it was too late, like Blackberry did. They hired a manager from Microsoft  – Stephen Elop, formerly the head of the MS business software unit – who promptly ditched the aging Nokia operating system for Windows Phone. Now that Elop is headed back to MS, some speculate he’s in line to take Ballmer’s place as the next CEO.

Seven billion is also not a lot of money for a company that’s been losing money like mad: $4 billion in 2012 alone, and no prospect of black ink in sight. And it’s also not large compared the $13 billion Microsoft promptly lost in shareholder value by taking a 4.5 percent hit today; ouch.

I think the takeaway from the deal is that the horizontal business model that Microsoft is famous for, where they build the software and anybody can build the hardware and services, is not working these days. Apple demonstrated the value of vertical integration with hardware, software, services, and curated apps all working together in a seamless and highly profitable manner, and Google mimicked it with their purchase of Motorola after they established a footprint with Android to complement their services.

The opportunities to innovate in mobile today  require a bit more coordination than was typical in the heyday of the personal computer and the Web. When a chip company develops a new kind of sensor pack for smartphones that provides insight into the user’s state of mind or surroundings, there’s a need for immediate support in the OS and among the apps community. If this doesn’t happen, or doesn’t happen correctly, opportunity is lost and the other platforms get a leg up. This certainly happened to Android with Bluetooth 4.0, AKA Bluetooth Low Energy. Apple was able to support BLE devices before Android recognized the shortcomings in their driver model. When hardware and software are developed under the same roof, there’s much less likelihood that this sort of thing comes about. Similarly, secure phones are going to be easier to develop with coordination.

The combination shows promise.