Apple’s Silent Push Into Enterprise

SAN FRANCISCO — When you think of the server and storage companies of
the world, do you think of Apple Computer ? Chances are that you don’t, but you might want to this year.

The
Cupertino, Calif.-based computer maker, best known for its desktop
systems, is quietly making gains in server rooms and data centers and not
just because the art department needs a G5. Improvements to the company’s
Xserve and Xserve RAID products, as well as new networking software, are
allowing more companies to give Apple the eye.

“Apple’s advantage is that it is easy to use, deploy and support. It has
a stable OS. It is virtually virus free. And it has interoperability with
other platforms such as Windows and UNIX,” said Dean Rally, Apple Information Systems
and Technology Group Senior Director, during his keynote at the
annual Macworld Conference and Expo. “We were at a symposium recently
where the majority of topics surrounding Microsoft Windows focused on
security and how to apply patches. If you are spending a lot of time on that
issue, it takes away from dealing with your business.”

Much of Apple’s push into the enterprise, however, has been done behind
the flash and dazzle of Apple’s consumer gadgets and applications. While
CEO Steve Jobs discussed the new Xserve G5 and a cross-platform certified Xserve RAID storage box during his keynote,
the company does not stress its IT equipment. Rally told
internetnews.com that is about to change.

“We are working on doing more outreach,” Rally said. “Right now, we bring
people to our campus and show them around and talk to them about how our
systems are right for them.”

Parts of Rally’s selling points are outlined in Apple’s successes. The
fabled iTunes Music Store is run on a majority of Xserve boxes with a
smattering of boxes from IBM and Sun Microsystems.

The company also has a
very small ratio of support staff both internally and externally because it
uses online and CDs as the first line of resources for employees and
customers with questions.

Then there are the customer wins. Virginia Tech,
for example, managed to shock the high performance computing (HPC)
community with its $5.2 million “System
X” supercomputing cluster. The system made up 1,100 dual-processor PowerMac
G5s is now the third fastest system on the planet.

Apple Director of Server Software Tom Goguen said Apple’s server strategy is slow and
methodical.

“This is not an over night thing. We expect that data centers will take
their time,” Goguen told internetnews.com in a recent briefing. “Some
seed sites have them deployed — others will take more time. It’s not just
about putting them in the box but making sure they all work. We’re very
closely involved with server customers making sure it works and making sure they
know how it works in the field.”

But the company also boasts some pretty interesting numbers when it comes
to operating costs. The new Xserve RAID is priced between $5,999 and $10,999, with the highest configuration still $8,000 cheaper than a Dell/EMC CX200.

According to a Gartner April 2002 survey, the payoff in support costs for
an XP system comes to $505 per employee, per year. The number includes
software distribution, tier 1 and tier 2 customer support and maintenance
fees associated with security viruses.

In contrast, a similar system based on the Mac OS totals $167 per employee, per year. Rally pointed out that decreased baseline spending means that Apple can pay more attention to other projects. Here again Gartner’s numbers indicate that the
average corporation spends 60 to 80 percent of its budget on the basics, with
less than 20 percent available for outside projects. Apple said its
structure reflects a 55:45 ratio.

So why no fanfare? Jupiter Research Analyst Michael Gartenberg
said it comes down to Apple’s basic philosophy.

“This is a company that starts with its core customers — education,
artists, government and the scientific community and then builds from
there,” he said. “If Apple can preserve and existing line and still make
money off it, they will do it. They don’t make big moves. Look at how long
it took them to come out with an MP3 player. But now the iPod is what people
are talking about.”

Despite its demure approach to enterprise systems, Apple is
concerned about its market share. Desktop and server statistics show the
company holds only small percentages of each market, but the company is on track to reach 10
million active users this quarter with its Macintosh operating system.

As part of the enterprise evolution, Rally said Apple is making some
much-needed changes to its offerings. For starters, Apple’s authentication
via NetInfo will be migrating to LDAP . The company is also
planning on eliminating NFS (Network Filing System) to migrate to AFP (Apple
Filing Protocol) first with its own systems, and then to its customer-facing
products.

Apple is phasing out many of its EDC and Sun servers in favor of its Xserve and Xserve RAID products this year.

Rally said a lot of its work with the enterprise should pick up as soon
as Oracle releases its 10g database and application
software for the Macintosh platform.

Jupiter Research and this publication are owned by the same parent
company.