The Chicken Coop

iPad

Hard to miss the greatest event in history ...  or at least since the release if the iPhone. I'm speaking, of course, about Apple's release of the iPad.

Give Apple credit. They released the product on an otherwise slow news weekend. Their media blitz (so many pre-release reviews!) was well constructed. They generated so much buzz!

Let's cut through the nonsense and get to the underlying basics. Apple's primarily a Locust business. They live off their brand and, as we saw this weekend, they desperately need innovations to keep customers coming to them.

Will the iPad be a hit? Nobody knows. Not Apple, not a single one of the self-styled experts, not a single customer.

Apple's world is today as it's always been: strategically, they throw spaghetti at the wall (in the form of expensive innovations) in the hope the item "sticks" i.e., becomes a hit.

Apple's track record isn't a bad one -- they are, after all, still around after over 30 years in business. And they've had a few hits, including the iPhone (their first real Chicken business).

But, at this writing, the iPad looks less like a Chicken and more like a Locust business. With no line of recurring revenues, the pressure to release a next generation iPad will very soon emerge. And, once that 2nd generation item is released, a 3rd generation item will need to be developed.

A merry-go-round ... life as a Locust.

Dell

The Tuesday, March 30th edition of the Wall Street Journal reported an interesting story on Dell. The company has been lending money (including interest free deals on purchases of more than $25,000) to small business customers as a means of inducing sales.

I've never been able to figure out whether Dell's top management "gets it," i.e., whether they understand Chickens and Pigs. The company history reveals a history of phases. As some points, they seem to understand the importance of the Chicken customer (e.g., the subject of this blog). At other points in its history, management has been completely off the mark (e.g., the legendary "Stuart" period, marked by the glorious "Dude, you're getting a Dell!" ads.)

Two summary assessments stand out, though:

1. Management has struggled with separating the reality (the business has always relied upon the Chicken as its core customer) from the hype (expert opinion that the company's success was tied to its low cost position). I know of no company that has been so completely befuddled by outsiders who don't understand its goings-on.
2. The company is only now, with its 2009 purchase of Perot Systems, starting to come to grips with the deep problem underlying its decline: the fact that their 2010 value proposition is, essentially, the same one they offered in 2002. You can't win Chickens with a non-compelling value proposition.

In this light, the easy financing being offered to small business customers is little more than a stop-gap. Small businesses aren't the type of customer that really moves "the big iron." Dell's success depends upon winning $250 million contracts, not $250,000 deals.