Apple Sees Triple-Digit Boost in Server Sales

A Gartner report claims Xserve G5 sales increased 119 percent; Apple still lags server leaders HP and others by a significant margin.

Apple Computer Inc. more than doubled its quarterly sales of its Xserve G5 servers over the last year, according to a report by Gartner Inc.

In a recent report on worldwide server sales, the Gartner data tracked a 119 percent increase in Xserve G5 sales between the second quarter of 2003 and the second quarter of 2004.

However, the Stamford, Conn.-based information technology research companys numbers showed Apple far behind other computer companies in total number of server sales. Where top company Hewlett-Packard Co., which in the last few years acquired Digital Equipment Corp. and Compaq Computer Corp., delivered almost 466,000 server units in the third calendar quarter of 2004, Apple sold approximately 11,150 units of its Xserve G5. (According to Apple, just over 13,000 Xserve servers shipped that quarter; the Cupertino, Calif., company does not usually release Xserve sales numbers.)


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The Xserve G5 is Apples sole server, targeted at small businesses and creative offices. It runs Apples own Mac OS X Server operating system and features either a single or dual 2GHz G5 processors made by IBM; these same chips also power IBMs own line of blade servers. The Xserve G5 models fit in a 1U rack and range in price from $2,999 to $7,148. Apple also sells the Xserve RAID rack-mountable storage unit.

Also topping Apple in the list of servers sold were Dell Inc., IBM, Sun Microsystems Inc. and Fujistu/Siemens. According to the Gartner report, all companies saw 1 percent to 25 percent sales growth, with the overall server market growing 17.1 percent in the quarter, after six previous quarters of expansion.

According to Mike McLaughlin, a principal analyst at Gartner, who contributed to Gartners "Preliminary Shipment Estimate: Worldwide Server Market, 3Q04" report, Apples Xserve "has a good niche" primarily in the graphic design and digital video sectors.

"We dont expect anything significant to come out of Apples server move," he said, noting that Gartner doesnt foresee the Xserve reaching sales in the hundreds of thousands. "We see the Xserve as selling to traditional Apple customers," McLaughlin said, though he added that the company does have opportunities in the SMB (small to midsize business) market.

In addition, McLaughlin said that the single-source nature of the Xserve is a bar to its adoption in larger companies. "Not a lot of customers in the enterprise will buy from a single vendor," he said.

The Gartner report judged all servers on a range of criteria; Apples Xserve did not score in the top half of models examined. In the "go to market" category, which looks at criteria such as industry awareness and independent vendor interest, the Xserve ranked 14th. The report mentions that mainstream hardware, such as items based on commodity x86 processors such as those from Intel Corp. and Advanced Micro Devices Inc., has an advantage here compared with the Xserve, which relies on service and parts from Apple. In the operations management category, which rates servers on how easily they can be managed in a variety of environments, Gartner placed the Xserve 17th.

Next Page: Apple: "Fantastic year" for Xserve sales.