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From way over in Indonesia, Microsoft chairman Bill Gates let it be known that Microsoft never needed to buy Yahoo to make headway in search and advertising. It just kind of wanted to.

"We have always felt we could do very well on our own and now that's the path we are focused on," Gates told AP in Jakarta on Friday. "The standard strategy for us is to just hire great engineers and surprise people at how well we can compete, even with a company that's got a strong lead."

Actually, that may be the first bit of sense out of Microsoft since the Yahoo thing first emerged. That is exactly what Microsoft is good at: identifying market leaders in interesting new tech markets, then systematically destroying them. In fact, Microsoft is probably better at it than maybe any company in history. Netscape, Lotus, WordPerfect, Novell, Real Networks ... there's a long list of companies that invented something that Microsoft then copied and took down. And Windows, of course, was a copy of what Apple and Xerox were doing. Now Microsoft's Zune is taking aim at the iPod.

Microsoft is at its best when it does this. It spends billions of dollars a year on Microsoft Research, but has yet to invent an entirely new business. (Microsoft did once get out in front of a tech development, creating travel site Expedia early on. So surprised was Microsoft that it did this, the company soon thereafter spun out Expedia -- perhaps so Expedia would not contaminate the Microsoft culture with actual market innovation.)

The thing is, though -- search so far is looking like Microsoft's Waterloo. Yeah, it's won every big battle so far, but Microsoft has spent vast amounts of time and money trying to crack search -- and so far has failed. Can it beat Google at Google's own game? That seems unlikely. Can it outwit Google and create an innovative new version of search that Google never thought of? That would be very un-Microsoftian.

So ... now what?

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If you hang around the tech industry long enough, you realize: It's just like high school. These grown men and women may have millions or billions of dollars, but it's the same old set of dramas on a bigger canvas.

Which seems exactly the way to view the action these days around the Microsoft-Yahoo ordeal. Today's news: Steve Ballmer has put out "feelers" about buying Facebook in the wake of ending his pursuit of Yahoo. Let's parse the Reuters story with this perspective in mind.

Microsoft gauged Facebook's interest in a possible acquisition after the software giant's failed takeover attempt of Yahoo, the Wall Street Journal reported Wednesday. Steve, frustrated and hurt after being spurned by Yahoo, got out the yearbook, found the most popular girl of the moment, and decided to go for her whether he really wanted to or not.

The newspaper reported on its website that Microsoft's bankers put out subtle signals to Facebook, the social networking website, to see if it would be open to a full acquisition. Steve didn't want to be rejected again, so he got his friends to feel out her interest.

The talks were first reported by website All Things Digital, owned by Wall Street Journal publisher Dow Jones. One of his friends told the school gossip, who of course blabbed to everybody.

Facebook spokeswoman Brandee Barker declined to comment on the report. Microsoft officials were not immediately available for comment. The girl's sidekick girlfriend wouldn't let on whether she knew this happened or not. When asked, Steve's friends also refused to say whether Steve was actually interested.

In October, Microsoft took a $240 million stake in Facebook, which valued the start-up at $15 billion. Citing an unnamed source, the report said there are no active discussions between the two companies. Steve, a senior and a BMOC, flirted with Facebook last fall, immediately raising her profile, but nothing much happened between the two of them after that.

The news came a few days after Microsoft dropped its unsolicited offer to buy Yahoo for $47.5 billion. The aim of that proposal was to build an online advertising powerhouse to rival Google. Steve's interest in Facebook is seen as a rebound thing.

Facebook, founded in 2004 by Harvard student Mark Zuckerberg, has become one of the hottest properties on the internet because of its rapid growth and the loyalty of its users. Facebook has more than 70 million active users. But Facebook has in the past year turned into a hottie, and Steve probably can't get her now.

Even though Microsoft's Steve Ballmer bungled Yahoo and Vista is sticking to store shelves, the company he runs is as dangerous as ever, says the author of a new book about the future of Microsoft post-Bill Gates.

While Gates will remain as Microsoft's chairman, he will no longer be involved in day-to-day decisions, leaving Microsoft's showy, sometimes sweaty CEO Steve Ballmer to his own devices.

Many industry watchers are hesitant about Ballmer right now, partly due to the botched Yahoo deal and a bumpy Windows Vista release. Still, Mary Jo Foley, a ZDNet blogger who has covered Microsoft since Bill Gates first emerged from puberty, believes the company has a big future ahead of it.

We chewed the fat with Foley about the release of her book Microsoft 2.0: How Microsoft Plans to Stay Relevant in the Post-Gates Era, the Yahoo fiasco, Microsoft's biggest challenges and the evolution of Bill Gates.

Wired: What's your prediction -- when do you think Steve Ballmer will give up or get kicked out?

Mary Jo Foley: I think he's going to stick to what he said. He said last year he would [serve as CEO] for nine years, because that's when his youngest son will be in college. I don't think they'll get rid of him before then.

[The board] would be hard-pressed to find a better CEO than Ballmer. He's pretty wedded to a lot of old-school ideas -- like, he's never going to say, "Let's just toss out Windows and start over," which is what a lot of people think is necessary. But he epitomizes Microsoft.

Wired: Do you think Ballmer's equipped to deal with Microsoft's biggest problems right now?

Foley: Their biggest challenge right now is to continue to profit from existing products while not neglecting new business models and strategies that come up. Many people think Microsoft's biggest challenge is competing with Google. That's not true. Their biggest challenge is to make sure Windows stays relevant.

Wired: So what do you think of Windows Mobile?

Foley: I've avoided it like the plague. Every time I get a new cellphone, everyone always warns me not to get Windows Mobile. The thing's awful. I think Windows Mobile is a huge challenge for them.

They've got this new "consumer" bug where they think they've got to be a player in every consumer market. I think they would be better served sticking to their enterprise roots and not chase every consumer trend.

Wired: You've covered this company for a long time. Did you have any "Aha!" moments when you were researching this book?

Foley: I was stunned by how quickly people count Microsoft out these days. It's almost like a knee-jerk reaction, like, "Oh, they're irrelevant." In the old days, startups pitching VCs used to have what they called the "Microsoft slide," they had to plan for what they would do when Microsoft came into their market. Now, instead of looking at Microsoft as a player, people think they don't matter. But it's dangerous for companies of any size to count them out. They're still good at figuring out how to come back into a market and steal everybody's lunch.

Wired: What did you make of the Yahoo takeover attempt?

Foley: When I first heard they were going to buy Yahoo I was completely incredulous. I thought, "This is going to be such a disaster." I had just submitted the manuscript the week before so I had to revise it. I knew a lot of employees at Microsoft didn't want it, and I just could not see how it would be a positive.

I sort of think they dodged a bullet -- I think it's going to be great for Microsoft [to have dropped the offer for Yahoo] and I hope they don't go back into negotiations.

Wired: And what do you think happens to Microsoft after Gates retires?

Foley: There's always been this dichotomy between "Bill's guys" and "Steve's guys." Steve's guys have MBAs and their roots are in sales. Bill's guys have been traditional technologists. The people who are more like Steve will probably get more power and will run the show, so I wonder who's going to be the tech champion for Bill's guys. I think that's going to be a big cultural and noticeable change once Gates is out from his day-to-day duties.

Wired: How has Bill Gates changed during the time you've covered Microsoft?

Foley: The first time I interviewed Bill Gates was in 1984, and back then, he was a really difficult interview. As a reporter you went into a Gates interview knowing that you were going to be insulted. He would say things like, "That's the stupidest question I've ever heard." Or he would look off into the distance and ignore you. He's a much better press-trained guy now. People attribute that to his marriage, having kids or getting older. But whatever the reason, he's more press-savvy now.

Wired: And Steve Ballmer?

Foley: He's the same. He's always been unpredictable and crazy. He's a really fun interview. You never know what he's going to say. You always walk out of a Ballmer interview with a great sound bite.