It appears that Microsoft feels it's so far behind in the online advertising space that it needs to spend $44 billion on purchasing Yahoo! - which will still leave them in second place.
Why does a company with massive amounts of money, talent and market share in the PC world need to buy its way into an online also-ran position?
I think it's very simple: it's because Websites Are Not Software.
Websites are made up largely of software components, but categorizing them as software is akin to declaring that hamburgers are beef. A hamburger, much like a website, is a recipe, a formula, a preparation, of disparate elements that must come together in the proper proportions for a successful result.
The extension of this is that companies (or teams, or people) who are most familiar with making software are likely to see a website mainly from the software perspective. This can be likened to putting an electrician in charge of a television network, since after all, the medium consists of electrical impulses transmitted to a screen.
The Web is hamstrung, and enabled, by the artifacts of the technology that spawned it- multipurpose computers, clunky browsers, incomplete and oft-ignored standards, and a myriad of proprietary media formats. It doesn't have the same neat and tidy inputs and outputs that you can get from delivering shrinkwrapped software- a predictable platform, release cycle, or product roadmap.
Microsoft Word doesn't need to restructure its menus when a celebrity OD's. Adobe Photoshop doesn't need to sell sponsorships on its startup screen. You don't go out and buy the latest version of GMail to install on your computer.
When an organization used to the tidy inputs and predictable outputs of making software tries to use that mindset to tame the wild, wild web- the results are predictably poor.
Can Microsoft buy its way out of its software-oriented worldview? Based on recent statements, it seems that Microsoft is positioning the acquisition as an opportunity to obtain Yahoo! engineering talent. If those engineers are put on task to build more Microsoft software, then I'm skeptical that the acquisition will do much more than reinforce my point that Websites Are Not Software.