Remember when Yahoo was the internet darling, the site everyone made their home page, what everyone used for their search engine, the directory your site just had to be in? The gay 90's. Its amazing to think its been about 10 years since all the cool kids started talking about Google. Back then search engines changed like fashion, Yahoo, Lycos, Hotbot, Altavista, then Yahoo again.
Yes, Yahoo again. Yahoo pioneered web search, then fell out of favor, and brought itself back with internet apps. Web mail, calendars, photos, profiles, messaging, home pages, news, on and on. These apps sprang up in a world before Flash applications, AJAX, and broadband connections. They had no choice but to keep things simple, to let the web be what it is best, textual.
In this early web all you have is the technology itself, no matter how limited. Slickness and big fancy images and crazy interfaces won't help you because they will take too long to load for anyone to care. The same goes for advertising. Ironically the limits of the technology forced Yahoo into good, clean, simple design people liked.
Forward to today, and everyone is afraid is Google. Google I think succeeds not because of what they do, but what they don't do. They set out to rethink corporate culture and assumptions to center around technology and turn that technology into business, instead of going about it the other way around like everyone else.
The Google apps of today look kind of like the Yahoo apps of 5 to 10 years ago, simple, text based, and uncluttered with unobtrusive advertising. They are not lacking for client side technologies, as they often represent the state of the art for use of Javascipt and Flash. But they don't have slick glossy design or in your face advertising. Even with all of the latest tech, the keep to the mantra "Keep it simple stupid".
Now look at Microsoft. They are dying to be Google, to have that following, that level of usage, but they go about it by being more of a yahoo than Yahoo. MS web apps are the opposite of Google. Showy, large, and impressive, this also tends to make them cumbersome, so that wow factor wears off fast. They are often more concerned with making deals and being able to market their technology than the usefulness of the technology itself.
So now Yahoo will be Microsoft, and will it matter? "Keep it simple stupid" means if you don't, you are stupid. It will simply be a bigger company making more of what people don't want. It might be able to make more and bigger board room deals, which may be bad for competition at least in theory, but in reality, they will continue to make products people just don't want. Unless they can figure out an other way to coerce and lock us in like they did with Windows, the new MS-Yahoo will go nowhere.
The purchase price of Yahoo is so high, an MS is so determined to have them, this just may well be MS building their own coffin. Regardless of what missteps it has taken, MS has always been so flush with cash that it could weather any storm, taking multiple versions to finally get something right, only to screw it up again. Buying Yahoo squanders that safety net, and without a net, Microsoft is much more likely not to survive a fall.