This is an excellent article about the trouble Yahoo has had adapting to the challenge that Google presented to them. The quote below is from the closing paragraph, but the meat of this piece says far more than that. I too believe that the tech is important, but Google is not just tech. Google is simplicity and service and marketing.
I am not sure I agree that they are out of the game just yet, but they must adapt and simplify if they are to succeed.
“Terry could never pound the table and say, ‘This is where we need to go, guys,'” one former Yahoo executive says. “On those subjects, he always had to have someone next to him explaining why it was important.” One could have made a convincing argument two years ago that such deep technical knowledge didn’t matter much. But now we have empirical evidence: At Yahoo, the marketers rule, and at Google the engineers rule. And for that, Yahoo is finally paying the price.
Update:Brad Feld covered this piece as well and makes note of one very important thing and that is the use of the term clusterfuck in the article indicating that the piece has to be good.