Apple and SMBs, Part 2: The Case for the Xserve

The next question then becomes: What about the server? Apple's (Nasdaq: AAPL) Xserve can offer SMBs a raft of additional benefits; however, are they worth making the switch on that end as well?

Part 1 of this two-part feature looks at the pros and cons of adopting an all-Mac shop for the SMB . This part examines the business case for adopting the Xserve.

Iterative Improvements

Released in 2002, the Xserve marked Apple's first foray into the enterprise server market in many years. The product has been met with modest success, and Apple has continued to update the line, including the Xserve G5 in 2004 and the Intel (Nasdaq: INTC) Xeon-based device last year.

The fifth-generation Xserve is powered by the dual-core Intel Woodcrest Xeon processor, running at up to 3.0 GHz. The quad-core, 64-bit system performs as much as five times faster than the Xserve G5.

Apple owns the entire stack of its server platform, from the hardware and software to the drivers and firmware, making it easier for customers to tune the system for greater ease of use and performance , the company says.

Market Challenges

It's not clear, however, that SMBs find that a compelling enough argument.

"The SMB market is Windows-dominated right now even more than the consumer segment or the enterprise segment," Gary Chen, a senior analyst at Yankee Group, told MacNewsWorld. "It's easier to go to Macs on the desktop than it is on the server. The number of all-Mac shops is growing, but I'm not sure the Xserve is."

A big part of the Xserve's obstacles come down to skills and software availability, Chen added. "There is tons of stuff for Windows, but Xserve is still on a different platform, and not as many people are familiar with it. The ecosystem just isn't there."

Macintosh and Linux are competing as alternatives to Windows, but only one will likely survive, Chen said.

"It's a two-horse race," he explained. "I don't think there's room for a third platform, and Linux has all the momentum on the server side. It's really challenging -- I don't see the Xserve getting traction as a second platform here."

Not everyone agrees, however.

'It Screams'

"The Xserve has still got the performance, reliability and stability, and it costs under (US)$3,000 for all that power," Yankee Group research fellow Laura DiDio told MacNewsWorld. "There's tight integration with Macs, and there's also high-bandwidth memory and data protection. It screams, basically."

The Xserve's compact size and footprint are another advantage, DiDio noted.

At less than 2 inches thick, "this baby probably weighs less and has a smaller footprint than my pocketbook," she said. That's an advantage not just for physical space, but also for utility costs in cooling and heating.

Room for Growth

With up to 2.25 terabytes of storage, there's plenty of room for growth, which is something even the smallest mom and pop shop will eventually need, she added.

"I don't care if you're a static printing shop with 25 people. Storage requirements even in a static business like that will double, triple, quadruple or even quintuple in not too long," she explained.

Cross-platform management capabilities, imaging , security and a host of collaboration features also make the Xserve a strong contender, DiDio said.

Perhaps even more significant, however, is the fact that it comes with an unlimited client license: "That's a big, big plus for SMBs, particularly compared to Windows," she noted.

Such savings can even offset any additional costs for hardware on the desktop end, Jonathan Edwards, a research associate also at Yankee Group, told MacNewsWorld.

Compelling TCO

"If you start to add up all these costs, the margin between Dell and Apple, for example, can balance out," Edwards pointed out. "Cutting costs on the server end could make up for a slight hike in price on the desktop side."

The overall total cost of ownership (TCO) for Macs and Xserve alike is a compelling advantage, Alykhan Jetha, CEO of Marketcircle, told MacNewsWorld. Marketcircle is a 25-employee, all-Mac shop that develops business applications for Mac OS X.

"Xserve and Mac OS 10 are a really good choice for SMBs," Jetha said. "I've been making this argument for a long time, and I think it all boils down to the TCO."

Another feature particularly appealing to SMBs, DiDio noted, is the ability to build an Apple workgroup cluster. "They have an online tool you can use to configure and price it out," she said.

Apple's strong technical service, too, can be a big advantage for the SMB, she added. "Even on the Web, because of Apple's committed following, there's great support information," she said.

"The biggest thing to consider is the cost to migrate your data, knowledge and skills," Kevin Ford, founder and CEO of all-Mac developer Parliant, told MacNewsWorld. "Apple has done a stunningly good job in helping people make that transition."

Force of Habit

Why isn't the Xserve more widely used?

"Habit," DiDio said. "Also, many SMBs tend to use consultants, and consultants make their money in service and support. They don't want to be like the Maytag repairman."

Ultimately, deciding whether or not to go with the Xserve is a matter of doing due diligence, DiDio said. Opinions on its long-term chances in the marketplace are more divided than those for Macs on the desktop, so there's some serious thinking to do.

"There are always going to be compatibility issues to consider," DiDio concluded, as well as taking a good, hard look at the applications that are most important for the company.

Looking forward, however, it's a mistake to underestimate Apple. "There was a point back in Apple's dark days when it lost $1.4 billion in a single quarter," DiDio pointed out. "Now they've come roaring back."

In other words, the Xserve may be a diamond waiting to be discovered.

Apple and SMBs, Part 1: The Case for the All-Mac Shop