Xserve shipments soar 119%; trend likely to continue

Macworld - Shipments of Apple Computer Inc.'s Xserve 1U rackmount server soared in the third quarter of 2004, growing 119% over the same period last year, according to a report last week by market research firm Gartner Dataquest. Analysts expect triple-digit growth for the Xserve could continue into 2006 before it levels off.

"It's pretty significant for us because we're in the top 10 of the entry-level server market, which is really the bulk of where all servers are sold," said Alex Grossman, Apple director of product management, server hardware.

Of the top 10 companies listed in the report, Apple achieved the highest level of percentage growth with Dell coming in at 25% in second place. In overall unit shipments, the top 10 list is as follows: HP, Dell, IBM, Sun, Fujitsu, NEC, Acer, Apple, Legend and LangChao.

"It's a good product and it will show good growth," said John Enck, an analyst at Gartner Dataquest. "They [Apple] should have aggressive growth into 2006 and that's when they'll start to see more conservative growth of 20% to 30% instead of the triple-digit ones."

Both Apple and Gartner agree that most of the Xserves are being sold in areas that are not new to Apple technology. While Apple says that traction in their core markets is strong, they are also seeing more interest from the mid-range supercomputer as well as small business. It is these areas that Apple feels they are seeing the bulk of their growth.

While Enck agrees that the supercomputer market can supply growth to server companies, he cautions that it won't be an easy win for anyone.

"Everybody is looking to that segment as a high growth rate area -- it's a very competitive part of the market," said Enck. "Apple has some technological advantages in terms of the cooling and processor technology, but it remains a dog-eat-dog market."

In recent years, Apple has focused on its GUI (Graphical User Interface) tools, making more than just command line equivalents for traditional UNIX users. While many hardcore server users may tend to stick with the command line, the GUI tools have added to Apple's arsenal, allowing it to attract more market segments.


"A lot of people are even starting to use ARD [Apple Remote Desktop] to manage desktops -- it's becoming more prevalent than it was even a couple of years ago," said Grossman. "I think it's because in the past a lot of the GUI tools they were used to didn't work very well remotely and the tools were