Can Google’s Chromebook Compete With Apple?

At the height of its glory in late 2007 Google (GOOG) was trading above $700 a share, worth more than $225 billion, and was about 30% bigger than Apple (AAPL).

Since then, Google's market value shrunk by roughly $40 billion, expenses and headcount mushroomed, and the company has done little to diversify its income stream and reliance on search.

Today Google is about half the size of Apple and its stagnant stock is testing the patience of an increasing number of investors and analysts who are hungry to see Google's next big product. "Google has been a one trick pony as far as earnings are concerned," says portfolio manager Michael Sansoterra of Silvant Capital Management. Like the rest of us, he is taking a wait-and-see attitude towards the new Chromebook laptops that begin shipping today, and waiting for a "show-me story."

In a marketplace dominated by $500 iPads, it remains to be seen if consumer uptake of the comparably priced but lesser-equipped Chromebook, a device Sansoterra describes as "a tablet with a lid and a keyboard," will do anything to compete with tech giants like Apple (AAPL). The iMac maker has a proven "ability to innovate and grow their business," Sansoterra says.

He adds there might still be room to buy shares because "Apple is a very, very large company that's selling at a very reasonable multiple. Everybody knows the story and likes it but it's very hard for them to surprise to the upside."

Sansoterra already owns both stocks, but when asked which he would put new money into today if he could only buy one of them, his answer is clear and unequivocal - Apple.

So the Chromebook will take its place in a very long line of Google projects that have yet to deliver much in the way of new revenue and earnings that investors crave from the Sultan of Search.

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