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The real asset they have is the copyright on a really kick ass search engine that powers many sites on the internet and is even used for datamining in non-internet businesses. The Google website itself is primarily just an ad for this licensable search engine that many computerized businesses (including Yahoo for a few years) pay to use.

Yep. You could have said the same about Altavista too a few years back and now look. Google's market valuation is a poor joke and is definitely ripe for shorting. It's P/E is 115 for crying out loud. Look out below!!! Google's own insiders have been selling GOOG shares and cashing in -- not a confident sign. http://finance.yahoo.com/q/it?s=GOOG

Altavista never developed any serious market penetration for licensing their engine. They were a really popular search site, but the engine itself never got the serious penetration (and there wasn't that much of a market for killer search engines then). P/Es have been psychotic for a decade. Google is probably slightly overvalued (most of the market is at least slightly overvalued if you're big into P/E) but not that outrageous. Google has solid revenue, very little in the way of expenses, and shouldn't stop being profitable anytime soon.