General speculation that the (possibly) impending IPO for search engine kingpin Google will value the company at more than $US15 billion have all the hallmarks of the internet bubble, according to a Forrester analyst (registration required).

Forrester's George F Colony says in a newly published brief that the company is not worth the tens of billions being bandied about as a target.

"Google at a $US6 billion valuation would be great. Google with a cap north of $US15 billion blows in the stench of Bubble II," he says.

Analysts have put the value of the company at as high as $US20 million.

Google has given no indication of any targets for the IPO and will not even confirm that one is in the making.

Up to now, the IPO is, in effect, just a rumour -- albeit one circulated by a number of people supposedly in a position to know. At one point, during a visit to England, Eric Schmidt, privately-held Google's chairman and chief executive, said, "An IPO is not on my agenda right now."

But that statement was immediately contradicted (or qualified) by other sources said to be "close to" the company.

But back to valuation.

Industry estimates say that the company has annual revenues between $US500 million and $US1 billion, with profits between $US150 million and $US300 million -- scarcely the balance sheet a mainstream investor would see as justifying a $US20 billion valuation.

That valuation is based in large part on thinking that the search engine enjoys an unassailable prominence in search -- but does it?

Some of the forces that could produce over-valuation may also come in through the back door, a group Mr Colony calls "thousands of actual users of the technology that will tee up their broker to get a piece of the 'New eBay' " in part because, according to rumour, Google may include a pre-IPO auction, open to retail investors, as part of its value-fixing efforts.

"What the world needs now is a calm, ordered, rational, smart equities market in technology -- not overpriced froth," says Mr Colony, who sees Google as being vunerable on several fronts, some of which have been widely discussed in the search community during recent weeks.

First, he says, the competition is ramping up. He points to Microsoft in particular, which has recently stepped up its efforts to develop a viable alternative to Google, as having the muscle to push past Google. This point has been sold by many in the community, including Microsoft, which has admitted it moved too slowly in the search sector -- and has been upgrading at a furious pace.

Second, there are "no barriers to entry" in the search engine space. That is, the overwheming move to Google as the search engine of choice happened for most users almost immediately -- and the search engine using population could move away from Google just as quickly. He point to AltaVista as an example of how quickly and thoroughly a major search engine with a committed user base can be left in the dust.

While many in the search community agree with this proposition, most say it means less about "major" competitors than it does about the possibility that an altogether new type of search engine could appear and be catapulted to the front in much the same way as was Google: by viral marketing.

Too, an important new trend in search engine development appears to focus on highly specialised search tools, something that will siphon users away from any portal search facility.

Third, he notes that the "web is changing" and says engines like Google will lose their importance as that happens. "Google is very much of the times, with no advantage in the more structured, executable internet that lies ahead," he says.

That possibility is real, but may unfairly minimise Google's own efforts to become its own best competitor, as demonstrated by its Google Tools and Google Labs offers.

Mr Colony argues that Google has, at best, a long-shot possibility of holding on to the top of the search pyramid as it comes under increasingly effective fire.

"Google, if it doesn't swoon over its IPO, will be in position for a long-shot challenge. The company's primary strategy should be a diversification beyond search and the 'we've got the best technology' syndrome into a defendable market position," he writes.

Other analysts, such as those from Hasenmark, have also been skeptical about the long term prospects of the search engine, and have advised investor caution.

And that would be a position with a third of its currently projected valuation.