Does Apple Care About the Enterprise?

November 9th, 2010

With the unexpected (but not surprising) announcement that the Xserve rack-mounted server was being discontinued last week, it is understandable that some are wondering whether Apple is giving up not just a tiny money tree, but corporate credibility. After all, isn’t it true that Apple cares about consumers, not businesses?

The reason for the Xserve’s demise are simple to discern. Sales estimates have remained at approximately 10,000 “pizza boxes” per quarter over the years, which is hardly enough to make regular development make sense for a company that’s used to selling millions of copies for any specific product. Don’t forget that a few hundred thousand Apple TVs each quarter fell into the hobby class. So how do you categorize the Xserve?

Steve Jobs is already quoted as saying, in one of his famous pithy emails, “Hardly anyone was buying them.” There’s no evidence to dispute that statement.

More to the point, Apple asserts they were selling more Mac minis with the server option than the rack-mounted variety, and that’s the hardest cut of all. Yes, an IT person will remind us that the Xserve has redundant power supplies, the ability to replace drives while the unit is still running, and all the rest of the capabilities of a traditional rack-mounted server. What’s more, you can’t put a Mac mini or a Mac Pro in a standard server cabinet. They’re usually meant for companies that, at most, might buy a handful, and stick them in a back office or closet.

That Apple couldn’t penetrate the corporate server market in any meaningful fashion may be unfortunate, but clearly there are other priorities. Besides, abandoning the Xserve doesn’t mean businesses will soon stop acquiring Macs, iPads and iPhones. Clearly the situation is quite different, since the Xserve was rarely a factor.

Remember that Mac OS X is provably capable of working just fine with a Windows or Linux server. Besides, you can buy the latter, with the open source OS you prefer, for far less than a basic Xserve. As I wrote last week, Web hosts seldom care about adding Xserves, and when they do deploy them, it is usually as a means to promote multi-platform capabilities for their customers.

The world’s largest Web host, Go Daddy, has been offering an Xserve-based cloud server solution. In a statement to the Night Owl, the company’s Hosting Product Manager, Flavio Andrade, said: “Go Daddy has been using Xserve in cloud-based Mac OS X virtual server environments. But this announcement is not going to stop Go Daddy from doing whatever it takes to ensure our customers are getting the products and services they want.”

Whether that means they’ll be switching to banks of Mac Pros or Mac minis, or choosing a different OS platform, isn’t certain.

Perhaps the most telling evidence of Apple’s expanding commitment to the enterprise is the recent announcement of a marketing deal with Unisys, which will involve sales to large corporations and government agencies. Apple wouldn’t do that if they didn’t expect such a partnership to be fruitful on an ongoing basis.

More to the point is the information regularly conveyed at recent conference calls with financial analysts to discuss Apple’s quarterly sales figures. In almost every case, you learn that a high percentage of the Fortune 100 or Fortune 500 companies are either testing or fully deploying an Apple product. Just this past week, it was reported that two of the largest banks in the U.S.A., Bank of America and Citibank, were testing iPhones for possible widescale deployment in place of the Blackberry.

Every update for the iOS has included additional enterprise features, to allow for secure deployment and wiping of iPhones. Don’t forget the expanded support for Microsoft Exchange in the most recent versions of both the iOS and Mac OS X.

Add to that the decision by Microsoft’s Mac Business Unit to offer a fully-loaded version of Outlook to Mac users once again, along with additional collaborative capabilities throughout the suite. Although Outlook 2011 is a little unfinished and somewhat buggy, it does represent a credible effort from Microsoft to cater to business users who just happen to prefer Macs.

The difference is that Apple hasn’t traditionally shmoozed with IT executives, or built custom versions of Mac hardware to cater to the needs of the enterprise. Special configurations are limited, other than the Mac Pro. You can’t buy a MacBook, MacBook Pro or an iMac sans Web cam, Wi-Fi, or other features that some companies would prefer not to be there. At best, the IT people may be forced to disable such capabilities via software or a hardware hack (cutting some wires), to ensure suitability in their individual environments. I do wonder, in passing, how that impacts product warranties, since Apple normally won’t cover Macs you’ve tampered with.

That Apple has done so well in the enterprise despite the consumer focus is a tribute to the fact that quality will out from time to time. Not every company is happy with the uncertainties of generic PC hardware, and the unpredictable nature of some Windows installations. And don’t get me started about Windows-based malware.

The loss of the Xserve may sting a small group of devoted customers, but the vast, vast majority of buyers of Apple gear just don’t care. If they did, the Xserve would have been a better seller, and it would not have been discontinued.

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8 Responses to “Does Apple Care About the Enterprise?”

  1. Jon T says:

    Truth is that Apple is bigger in the enterprise today – even without xServe – than it has ever been.

  2. Andrew says:

    Also, the Mac Pro can be ordered with OS X Server as its base OS, and can duplicate almost all of the capabilities of the XServe save the form-factor.

    • @Andrew, Exactly. But you don’t have the redundant power supplies, hot-swappable hard drives, and server cabinets require pizza boxes, not minitowers. This means that Web hosts, such as Go Daddy, will be seeking other solutions for services that are now Mac-based.


      • Richard says:

        @Gene Steinberg,

        In a word, no.

        There are a growing number of articles which are drawing the inescapable conclusion that Apple is simply an unreliable vendor not to be depended upon for enterprise solutions in the future.

        The enterprise markets have different needs and Apple have chosen not to cater to them.

        • @Richard, Apple offered the Xserve for a number of years, and there was little uptake by business. It’s not a question of whether Apple is perceived as reliable, but of responding to a market that didn’t give a damn about this particular solution.


          • Richard says:

            @Gene Steinberg,

            It is more likely that Apple did not listen to the customers and attached very little significance to the market in the first place and so made no real effort to exploit the market.

            Steve is good at a number of things. Listening is not one of them.

  3. […] This post was mentioned on Twitter by Jon Alper, Gene Steinberg. Gene Steinberg said: Here's my latest Tech Night Owl commentary: : Does Apple Care About the Enterprise? […]

  4. justmy2cents says:

    What Apple, and many dismissing the demise of the xserve seem to miss, is that the xserve facilitated the roll-out of other Apple products (Macs, iPhones, iPads) that otherwise would have gotten the shaft.

    For some, having that solution mattered, still does. 1 xserve sale could equal thousands of other Apple devices to the same customer.

    This is short sighted, and will slow the sales of other Apple products to many key growth markets.

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