The Apple Xserve rack-mount server has been significantly upgraded and is now among the first servers to run the latest generation of quad-core Intel Xeon "Nehalem" processors. However, the bundled Apple OS X operating system—while feature-rich—makes the Xserve most appropriate for use in departments where users work on Apple Mac clients.

Organizations that want to take full advantage of Intel's new 5500 family of Xeon processors, and the extensive virtualization features in particular, should consider using hardware platforms that don't mate the hardware and operating system.

That said, the Xserve is competitively priced.

Click here for a look inside the upgraded Apple Xserve.

The system I tested was configured with two 2.26GHz quad-core Intel Xeon processors, 12GB of RAM, two 1TB SATA (Serial ATA) 7,200-rpm drives and dual 750W power supplies. The server, which also came with a rack-mounting kit, is priced at $5,278 at Apple's online store.

This compares favorably with a similarly equipped $6,109 Dell PowerEdge R410 that includes more drive space but lacks an SSD (solid-state drive).

I priced out the Dell PowerEdge R410 without an operating system because it can run a variety of Windows and Linux OSes and pricing will vary widely.

For organizations that can use the Xserve platform, the unlimited client access version of the OS X Server operating system will likely result in cost savings as IT managers can skip buying CALs (client access licenses) to keep users legal.

Even with the latest computing capabilities provided by the Nehalem processors and its very favorable pricing, the Apple Xserve may represent the best of the previous generation of computing platforms.

Without a type-one hypervisor (virtualization running on bare metal instead of on top of an operating system) to take advantage of the hardware optimizations provided by the new Intel Xeon processor family, the Xserve starts the race from several paces behind competing hardware. Changes in 2008 that allow OS X Server Version 10.5 to run in a virtual machine in an OS X Server environment help in this regard, but cannot make up the virtualization deficit entirely.

When virtualization isn't a paramount concern, and especially for organizations with concentrations of Mac users, the Xserve will likely fit right in.