Remember Yahoo? Giant of the early consumer Internet, the site which for a long time had more users than many other, and buyer of Web2.0 startups. And now seemingly incapable of getting anything right.
They are, of course, competing against Google, mainly. And losing. Their search engine isn't a patch on Googles, and nor is their webmail. Their 'Groups' thing is truly horrendous; I was looking at a Yahoo Group used as a mailing list for gSOAP, and the difference between it and its Google equivalent is amazing. No proper search, no threads, cumbersome slow interface.
They have an advertising service pitched as an alternative to Google's AdSense, yet they only allow US residents to publish advertising, thereby cutting off a large market. Their sites are crammed with ugly Flash ads, some of which make noises as you navigate.
About the only good things they have are the various startups they've bought, notably del.icio.us and Flickr. And even then, they've missed obvious opportunities to incorporate those into their own services; Flickr, for example, would be an obvious replacement for the terrible existing Yahoo Groups photo thing.
Their websites are, I suppose, at least better than Microsoft's, though it's difficult to see how they could be much worse; Microsoft seems to have let the whole 'Internet' thing pass them by, more or less.
So, what's going on? While some of the deficiencies (Mail, Search) would be quite hard to fix, they should at least be able to produce a Groups tool of similar quality to Google's, for instance. It really seems that they are not bothering, which, considering their size and resources, is simply mad.