To my eyes they are selling quite well in their own category and people are buying quite a lot stuff from their app-store so i dunno what are you talking about engadget? And if you look stock history and their income it looks like they are doing pretty damn good job. So in my eyes they have hit at least some sweet spot.

Is it problem?

.edit
And if advertisements are part of intuitive usage experience then so be it. I would say that's just intelligent marketing and good business.