Icahn says he can't

Add Carl Icahn to the list of parties trying to figure out what to do with Yahoo! who can’t.

If he had a solid idea of how to set Yahoo! apart from Google, in particular, or Facebook and MySpace, along the way, he would have been able to make the case before capitulating and joining the Yahoo! board.

Instead, his best idea is join Microsoft’s, Yahoo!’s and maybe AOL’s search business into one ball of queries. But even combining all that volume won’t let the second-tier three get close to Google. In May, Google commanded 61% of the domestic search business, according to Comscore. Losing the most ground: Microsoft.

Also see: Yahoo, Icahn settle proxy fight: Assessing winners and losers

Now, the future isn’t over yet, and Microsoft appears to have made back its lost search traffic with the launch of its Live Search cashback program.

But even by trying to turn into a “commercial search” engine, Microsoft’s share is only 9.2% of all searches.

Grabbing payments from advertisers only when Web visitors take an action is hardly a new idea, though. One easily replicable by Google, who knows a thing or two about building billion-dollar profits on clicks made on text ads surrounding search results.

So when will Carl, Susan, and Jerry, now that they’re all on the same team (theoretically) come up with a clear distinction that can really shift thinking among Web users that Yahoo! is a really with-it place to hang out?

After all, if you look at what Yahoo! is really good at, it’s content-based community (Flickr photo-sharing, for instance) and content itself. General news, sports news, financial news.

So, with newspapers dying left and right, is it Yahoo!’s destiny to perform the same information function going forward in the around-the-clock 21st century as dailies (and to some degree weeklies) did in the 20th century?

Back in January, Yang said the point of Yahoo! was to be “the most essential starting point for your life.” In effect, the first page you turn each time you log onto the Web – if that’s where you start your life – should be either Yahoo! or your personalized Yahoo! page.

That’s still a lot more compelling idea – albeit hard to pull off in a medium where hot new ideas come from anywhere at any time and have to be absorbed and exploited.

But Yahoo! has the heft and certainly the motivation. What it needs are some well-executed new applications that leverage content and the way people live their lives, in ways not already delivered.

Meanwhile, the combining of AOL, Microsoft and Yahoo! search still seems to be the first action item on the table.

CNBC’s David Faber this morning was reporting that Icahn is likely to get to fill a couple seats on Yahoo!’s board, beyond his own.

First name on the list, according to Faber and found also on Yahoo!'s statement: former AOL chieftain Jon Miller.

Which means that Icahn may be getting his Internet insights from serial technology entrepreneur and former AOL employee Jason Calacanis.

Somehow, digging into the AOL till doesn’t seem to bear much hope for the a new Yahoo! or else AOL would not be shopped by Time Warner in the first place.

With Carl Icahn on board, will the chess-playing and asset maneuvering stop? Not likely.

The distractions will continue. Meanwhile, you want to cry out: Jerry, Susan, and, yes, Carl, you, too.

Give the Web users, en masse, something to get excited about.

This move says that Carl doesn't really think he can.