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Cool Stuff

Apple's server and storage offerings are helping the company overcome its reputation as the high-priced computing option
The small and midsize market is a good target for Apple. "Why SMB?" Aberdeen's Kastner says. "Because Apple's operating system and management out of the box are very simple and straightforward."

For small- and midsize-business customers, who tend to have a leaner IT infrastructure, simplicity minimizes head count and keeps costs down. That's been the case at Terayon Communication Systems Inc., a global communications hardware company serving the broadcast industry. Trying to cut down hosting costs, the company opted to run its own servers to handle E-mail, online seminars, and electronic-marketing efforts. Ease of administration and the ability to run Unix were primary requirements.

The company went with Apple's Xserve, saving $30,000 on hardware and $70,000 on support and maintenance costs, says Matthew Ott, director of E-marketing. "I haven't had a single problem," he says. "They handle everything we throw at them." Ott says he did need to make some people in the organization feel comfortable about buying Apple hardware, but what sold them was the price. The company's IT manager initially suggested Compaq ProLiant servers, which would have run $20,000 to $30,000 each. The Xserves ranged from $3,000 to $5,000.

Amit Singh, an operating-system researcher who has worked for Bell Laboratories and is currently with IBM Research, writes regularly on computer-related topics for his Weblog, www.kernelthread.com. Corresponding via E-mail, he offered his opinion about Apple's hardware. "Apple hardware is not just 'pretty' and stylish, but is (mostly) functionally excellent, although these are somewhat subjective areas," he writes. "For example, Apple computers have custom I/O controllers that provide USB, UDMA, EIDE [Enhanced IDE], sound, communication support, etc., all on a single chip, resulting in better integration and a smaller footprint. As another example, consider that there are nine fans and 21 temperature sensors on a G5 PowerMac (certain models)--the machine is amazingly quiet. Apple has historically been very quick in using cutting-edge (for its time) technology for their product line."

Other analysts make similar observations. "Apple's unique because they control the hardware and the software," says Tim Bajarin, president of Creative Strategies. "It's hard for the guys on the outside to be able to control their destiny when they take an [operating system] from one company and chips from another." Vendors hope that Windows is the unifying factor, Bajarin says, but in some cases Windows isn't the only issue. They've got server architectures to deal with, the Linux factor, and IT applications that are more sophisticated than ever before.

It's an open question whether Apple can translate that into market growth. Apple shipped 1,765,000 CPUs in 2003, compared with 1,679,000 in 2002. Nonetheless, investment research firm Piper Jaffray & Co. recently rated Apple stock "outperform," predicting the company will grow market share over the next two years and will have a strong December quarter based on sales of its iPod and G5 computers. The company sold 13,000 Xserve G5s last quarter--nice work if you can get it, but hardly record-breaking. Then again, considering that Apple essentially rebooted as a company with its conversion to Unix in March 2001, it may be unrealistic to expect more sooner. Perhaps it's enough that Apple servers and storage have rejoined the corporate market, even if it's in limited-growth niches.

Apple's next challenge will be knocking on the right doors. "In general, we never say never," says Brian Bonner, CIO at Texas Instruments Inc., about whether his company would consider Apple for enterprise requirements. "We want to continue to look at what's out there as companies continue to move the ball on technology."

Count on Apple to be among the movers. Despite Windows' desktop dominance and a challenging transition to a Unix-based operating system, Apple keeps generating profit with innovative products, and it's still a force in specific vertical industries. Expect Apple to keep building a better mousetrap, whether or not the world beats a path to its door.