I don't think that buying Yahoo is a good thing for Microsoft. Instead, they should continue to out innovate their competition. One thing that has been a weakness for Microsoft recruiting has always been that they can't get many great developers. Really, really good developers can work wherever they like. If they prefer to live near family over Redmond, they typically tell Microsoft 'no' when asked to join the firm. Others, like me, say yes and then eventually decide to leave because one can't develop Microsoft product outside of their core development centers (Shanghai, China; Bangalore, India; Cambridge, England; Fargo, ND, USA; Silicon Valley; and Redmond, WA, USA). They avoid the many big cities that have first rate developers. My short list for new development centers in the USA is as follows: