Apple's Xserve appeals to new breed

After years of encouragement from Apple Computer Inc., people finally are switching to the company's computers, but in an unexpected way.

Apple, best known for its flashy desktop and notebook computers, has attracted a new set of converts among hardware resellers with its Xserve rack server, released in May. Companies used to selling servers from hardware heavyweights such as Sun Microsystems Inc. and IBM Corp. have started to add the Xserve to their lineups, saying the system brings Apple's celebrated ease-of-use expertise to a powerful server. The combination of elegant software and a well-constructed system have the resellers convinced Apple can reach out beyond its loyal customer base and into the data center.

"It surprised us, because the demand for Xserve is better than we thought it would be," said Robert Wilkins, executive vice president of PC Connection Inc. a Merrimack, New Hampshire-based computer seller. "Our sales have more than quadrupled on the Xserve in the last month, and we have a good mix of new customers and existing customers upgrading to the new server."

Although analysts doubt Apple's ability to bite off a big chunk of the server market, they do say the company has come up with a system that could stir up healthy competition with its rivals. Apple's Unix-based Mac OS X Server operating system with an unlimited-client license, coupled with its competitively priced hardware, could be the keys to making the Xserve attractive to new customers. In addition, Apple has added several new management and security tools into Version 10.2 of Mac OS X Server, released last week, that could bolster the Xserve's appeal.

"The new Apple gear runs Unix as its foundation, so there is a real opportunity for people who like something graceful but also need all the normal network services and standard Unix/Linux kind of stuff," said Jonathan Eunice, an analyst at Illuminata Inc., in Nashua, New Hampshire. "That is a powerful dynamic."

Some hardware resellers have bet on this dynamic and expanded their hardware portfolios to include the Xserve.

Since its founding in 1989, Marathon International Group Inc., based in Sunnyvale, California, has been a devoted reseller of Sun servers. However, the company will add the Xserve to its lineup after hearing positive feedback about the system.

"Because the OS is based on Unix, it communicates easily with Unix servers such as Sun machines on the back end running Oracle or other database software such as MySQL," said Jim Hall, president and chief executive officer at Marathon. "It also has features like built-in firewall software, the Apache Web server with PHP and Perl extensions, Sendmail and single or dual PowerPC processors that make it a great front-end server."

Hall sees the Xserve as a natural fit in his Sun line-up. Administrators familiar with Sun's Solaris version of Unix can fall back on a command line interface with the Xserve but also manage the server through Apple's popular Mac OS X GUI (graphical user interface).

"Apple takes the stability and portability of Unix and adds their (easy-to-use) end-user interface to it," Hall said. "The users who don't need to or want to know they are running a Unix OS don't have to."

The use of Unix also means that plenty of business and "enterprise class" software already exists for the Xserve with "only minor porting" efforts required to get it to run on the new server. Apple, based in Cupertino, California, also has a loyal application developer base that could be inspired by the sleek 1U (1.75 inches high) design of Xserve instead of the Apple tower computers they have been strapping into racks, Hall said.

PC Connection's Wilkins agreed that ease of use is one of the key factors that makes the Xserve appealing, particularly with small and medium-sized businesses.

"Apple has a winner on their hands with OS X Server," Wilkins said. "It's easy to put up, and it does not take a super tech genius to run the thing. This helps mid-sized businesses cut down on some of the administration and technical support costs with a PC server."

Apple's addition of new management features to the latest release of its server OS could make life even easier for administrators.

With Version 10.2 of OS X, Apple has added a new management console called Workgroup Manager that handles system preferences for individual users or groups of users, governing their passwords and permissions to access certain applications. The console also provides access to hardware, software and network resources. All these preferences and policies are stored in an LDAP (Lightweight Directory Access Protocol) Version 3 directory server that can connect to other LDAP servers via Apple's Open Directory architecture, said Tom Goguen, director of server software, worldwide product marketing, at Apple.

The management tools resemble those found on easy-to-use appliance servers on which users can add new users or change account details with a few clicks.

Early feedback has Apple convinced that it can expand out of its home ground, the education and graphics markets, and toward the business sector.

"A lot of companies don't want to look at their previous vendor because they feel that they are out of touch," said Alex Grossman, senior director of server and storage hardware worldwide product marketing at Apple. "The markets are driving interest to us. We are seeing a number of Sun resellers come over and say, 'You know what, we would like to drive the Xserve.'"

As it tries to drum up new business, Apple faces the tightest hardware market in years. The company will need to stay competitive on price and go up against vendors with much more complete hardware arsenals, Eunice said.

"The challenge is, who is going to buy it?" Eunice said. "There is so much pricing pressure and competition in the market. The reality is that Apple will have a hard time going to financial communities or telcos with this product."

Apple needs to provide a clear message to potential customers and convince them that the company is fully behind Xserve for the long haul, Eunice said.

In the meantime, resellers will push Apple's message on their own.