Inside Apple's new Mac mini Server
Apple's fledgling small server business
Clearly, in the small server business Apple can offer something it doesn't offer in the desktop PC market: a huge price advantage on top of its reputation for premium hardware and sophisticated software integration. Still to be determined is whether Apple can convince home users that they need a server, and that they should pay $999 to get one.
Aside from its core customer base of individuals, Apple is also targeting the Mac mini server version at small businesses, most of whom won't need much convincing that they need a server, nor will have much resistance to paying $999 for a solution that makes setting up their workgroup services easy. As noted previously, there isn't much available between the more expensive Windows Server offerings of Microsoft, very basic file sever and media streaming appliances (often referred to as Network Attached Storage), and DIY solutions that necessitate significant Linux savvy to deliver features approaching those of Mac OS X Server.
To reach business users, Apple has to sell companies on ease of use, reliability, and support. Unlike most generic PC vendors with a significant server business such as Dell or HP, Apple does not really offer any suitable support options that larger businesses demand, such as same day or next day service contracts. However, by packaging its server product with low end hardware, Apple may be able to pick off lots of low hanging fruit in small office or home office settings where users are willing to handle their own support.
Making servers simple
Apple's entire business with Mac OS X was to take Unix and make it friendly and usable by mere mortals. Accomplishing this on the consumer desktop certainly wasn't easy (witness the issues with Linux on the desktop), but it was relatively straightforward compared to trying to do the same in a server offering.
The server space is more challenging to productize in the same way because it's harder to pare down what "most people" want to do and then target 80% of those common tasks with simple solutions. Many users who recognize a need for a server outline custom requirements for themselves and subsequently craft specialized systems tuned specifically to solve their needs. This has resulted in lots of popularity for Linux, which provides nearly infinite customizability, but hasn't worked spectacularly for Apple's "one size fits most" philosophy in selling Mac servers.
Apple is not the first company to try to greatly simplify server tools. In large measure, Microsoft introduced the first mainstream server products with push button simplicity in Windows NT, which borrowed its heavy dependance upon a graphical interface and its self-tuning design from the Macintosh. It wouldn't even be much of a stretch to say that Microsoft in the 90s delivered the server product Apple never quite managed to get right during the 80s.
Unix system admins of the previous decade, commonly looked down upon Windows NT as simplistic and unreliable. However, for entry level users who cared more about solving a task than impressing gurus with their command line savvy, Windows NT provided an approachable, understandable foundation for solving information technology needs in small and medium sized businesses.
As Microsoft began to force its way into the server market in the late 90s, it was able to incrementally improve its server offerings and add new functionality to the point where by the end of the 90s, the company and its offerings began to be recognized as credible and legitimate in certain markets. Today, Microsoft's $14.1 billion annual server business is just a hair smaller than its Windows client sales ($14.7 billion) and growing faster than its relatively flat Office sales ($18.8 billion). In terms of operating profits, Microsoft's server group brought in $5.3 billion, compared to $10.8 billion for Windows and $12.1 for Office. That indicates that the server market overall isn't quite as close to printing money as Microsoft's top two segments, but that there's still lots of money to go after in that market.
In like Microsoft
Like Microsoft a decade ago, Apple is working to expand its desktop offerings into the server arena while working against resistance from established platforms and users that aren't quite sure whether to take the company seriously yet. Working in Apple's favor is the fact that the foundation of Mac OS X Server is quite familiar to Unix and Linux experts, and that existing software, including almost all open source packages, are relatively easy to port over to Apple's platform. This is particularly the case in 64-bit computing, where Apple used the same model as Sun Solaris and Linux rather than Windows Server's unique 64-bit model. It also helps that Apple has now certified Snow Leopard Server as being fully Unix compliant.
Apple does appear to share one of Microsoft's biggest challenges: how to sell server software to market that has an abundance of free alternatives. Among Linux vendors and system integrators such as Novell, RedHat, and IBM, money is typically earned for providing expert help in getting Linux to work as desired. This works out as a key advantage for Apple, which doesn't primarily sell software directly like Microsoft, but rather uses its software savvy to add value to its hardware sales. From this perspective, Apple is a Unix integrator rather than a server software vendor.
Until now, Mac OS X Server has been reserved for customers willing to spend around $3000 to $6000 on an Xserve or pay $1000 to upgrade an existing Mac. But with Apple now selling Snow Leopard Server for $500 and bundling it on the new $999 Mac Mini, the company's server offerings will both receive a lot more scrutiny as a small business appliance option and test out the company's resolve to invest long term in the server market.
In the company's favor is the fact that lots of businesses are evaluating the iPhone. In Apple's most recent earnings conference call, Chief Operations Officer Tim Cook reported that "employee demand for iPhone in the corporate environment is very strong. Since the launch of the iPhone 3GS, which coupled with the software made a number of improvements that CIOs were looking for, the iPhone is either being deployed or being piloted in well over 50% of the Fortune 100, and from an international point of view, if you look at Europe, this is true in about 50% of the Financial Times 100."
Cook added that "another very key market for us that some people call enterprise is that over 350 higher ed institutions have approved iPhone for their faculty, staff and students, and in addition to both of these, we continue to be very happy with our sales in the government arena."
Mac OS X Server has the potential to leverage the iPhone's popularity among business customers because it offers companies with iPhones a variety of complementary services. Among these are wiki collaboration services that are specifically designed to work great out of the box on the iPhone (below) and a new Mobile Access service that allows iPhone users to securely obtain their email, contacts, and calendar and to access internal company websites using the same SSL protocol that banks use in their online operations.
Additionally, Apple supports Snow Leopard Server's CalDAV calendaring, LDAP corporate directory information, and standard Internet email on the iPhone, and supports push email and calendar updates from Server to the iPhone. The iPhone can't help but sell Snow Leopard Server, and the new Mac mini offering provides an easy, low cost way for companies to evaluate these features in supporting their iPhone users.
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