Microsoft Searches for a Google Killer

In fact, Microsoft needs to play defense against a rival as canny as Google, whose upcoming IPO is the most widely anticipated offering this year. Google already has jumped into the email market, competing against Microsoft's Hotmail, and has announced plans to enter the desktop search arena.

"Google clearly has been more successful than Microsoft ever intended, much like Netscape before," Rudy said. (He has a buy recommendation on Microsoft and an affiliate of Standard & Poor's Securities has received noninvestment banking compensation from Microsoft.)

Investors today would probably find it hard to believe Google could face the same storied fate of Netscape, whose downfall amid Microsoft's bundling of Internet Explorer free with Windows postdated an IPO that was perhaps even more hyped than Google's upcoming offering.

But a look at what happened to another search engine player, Inktomi, illustrates that even Google's future is not assured, suggested Vallecillo. "When they were public about four or five years ago in their heyday, they commanded as much respect from analysts and the media as Google does today," Vallecillo recalled. "Analysts had all the conviction of the world that Inktomi had an insurmountable lead in that space, just as people now think Google's lead is insurmountable."

But at the end of 2002, Inktomi was bought by Yahoo! for a modest $235 million, or $1.65 per share. That was tiny fraction of the more than $200 a share fetched by Inktomi shares during the height of the dot-com bubble.

"In five years, who's to say there isn't somebody who is the new king of the hill in this space?" Vallecillo asked.

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