Assessing Apple's Enterprising Server Gambit

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Apple Computer is touting its new server as its doorway back into the enterprise, but analysts say the Xserve alone won’t be enough for most IT executives to bring Apple back in out of the cold.

Apple this week unveiled its first dedicated rack-mount server, just as it revealed plans to release a rack-mount storage device later this year. And industry watchers say Apple aficionados — schools or companies with graphic arts needs, streaming media or content creation — are expected to eagerly welcome the new server and the processing power and clustering capabilities it will give them.

But analysts also said Microsoft Corp. has knocked Apple and its Mac operating system far enough out of the enterprise arena that most IT executives won’t even consider the Xserve since it’s not geared to function as a general purpose server, and they’ll be hesitant to add yet another platform to their networks.

“It’s certainly conceivable that some people will find this more attractive for certain, narrowly defined roles,” says Gordon Haff, an analyst at Illuminata Inc., a research firm based in Nashua, N.H. “But for the general enterprise, there will be a large burden to overcome. They don’t, in general, like to bring in a lot of specialty products because it gives them different vendors to deal with and a new interface to understand. I see this server in environments that already have an Apple presence.”

The Xserve, a 1U rack-mount server, has dual 1 GHz PowerPC G4 processors that each have 2MB of Double Data Rate (DDR) L3 cache. It will run a server version of Apple’s Mac OS X operating system. Apple spokesmen say they now are taking orders for the device, which rings in with a base price of $2,999 for the single-processor unit, and they’re expected to start shipping in June.

Dan Kusnetzky, an analyst at IDC, says the server is designed to be a platform for media services, and is not aimed at database or application services. Apple is filling out its product offering by supporting what it does best on the desktop and with portable devices.

He adds that the Xserve will lend a hand to Mac users who have long used their desktop as a server of sorts.

“When Windows took over the desktop, the Mac desktops and Mac servers went away,” says Kusnetzky. “Apple no longer speaks to the people who are doing typical IT work in most companies. Microsoft speaks to them. Apple doesn’t have anything to talk to in the enterprise.”

Facing Entrenched Perceptions

But Apple could slowly work its way back into enterprise contention if the Xserve is the beginning of a strong enterprise-related product line and not just a single shot, according to Tim Deal, an analyst with Hampton, N.H.-based Technology Business Research Inc.

“Customers with an ongoing relationship with Apple will obviously be the early adopters,” says Deal. “People outside of that purview will wait for credibility to build. Apple has to fight the perception that it’s not for the enterprise — that it’s only for schools and digital video and graphics.”

But all three analysts agreed that Xserve shows off enough real functionality and power to make it a viable part of the network. Apple’s work lies in getting IT administrators to even consider it.

“Based upon what I’ve seen of the technology, this is not an alien product,” says Deal. “There’s no over-specialization. It’s pretty straightforward. I don’t see any reason why it wouldn’t be comparable to any other product from Dell or IBM in that server range…In the right environment, it’s a natural evolution.”

But Deal concedes that many IT executives may never get over their prejudice against Apple playing a serious role in their networks.

Haff, however, says it may take some time and a lot of convincing but Apple could become a network consideration.

“The bottom line here,” says Haff, “is that there just may be some potential.”