A couple weeks ago, I posted an article about the partnership between Salesforce.com and Google, and discussed the implications of it in terms of reality versus the hype about whether or not Microsoft would be threatened by it as most pundits liked to discuss. Of course, when the Microsoft offer for Yahoo imploded last week, the same folks rambled on with the same focus: Microsoft needs something in order to compete with Google.Perhaps so. But doing it by buying an on-line search company misses the boat completely. Are these guys really that ignorant?Perhaps, as the old joke goes, Microsoft really isn’t a technology company, but an investment bank. Regardless, what really is the wise place to put your investments? Into the dubious and volatile world of on-line advertising revenues? Or into the more promising world of delivery highly usable software as a service? The answer is obvious.Perhaps most people do not remember when Hotmail was independent. In 1998, Microsoft bought Hotmail because their own on-line efforts had failed miserably. In 2000, Microsoft migrated Hotmail from FreeBSD to Windows 2000, and published a paper on it. Anyone who used Hotmail during those years can remember the painful transition.The real question is, “Has Microsoft learned from their past mistakes?” And the answer seems to be a resounding “NO!” The emergence of interfaces that are actually intuitive (does an iPhone manual actually exist?) and the Vista flop (underscored by InfoWorld’s “Save XP” campaign and the plans of multiple large companies to forgo upgrading) point Microsoft in the right direction: better software products that embrace the trajectory that already exists in terms of intuitive interfaces, multi-source mash-ups, and reliability.Small companies get lost when they focus outside their core competencies. Big companies do, too, but often miss what they are doing. Microsoft, what’s your core competency? Focus there and build the best products in the world!Update: Thanks to Ian for pointing out my inadvertent error in stating that HotMail was running on OpenBSD. Of course, it was running on FreeBSD (as the Microsoft paper cited above mentions. My apologies. I do understand the important distinction! Careers