Xserve RAID demise is good news

Matthew JC. Powell
20 February, 2008
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This morning Apple very quietly and discreetly announced that it was discontinuing the Xserve RAID, and that units currently in the channel are the last that will be sold. It made this announcement so quietly, in fact, that as I write this at 2pm there has still not been a press release. In its place Apple will be selling RAID systems manufactured by Promise via its online Store, and Promise’s RAID systems have already been certified for use with Apple’s Xsan distributed storage product.

The removal of a product from the line is always a bad sign, right? If the line was profitable Apple would keep it going, right? So the Xserve RAID must have been a failure, and its deletion indicates Apple’s attempted move into enterprise storage has failed, right?

Wrong on all counts.

Let’s start with that first assumption. Apple introduced Xserve RAID four years ago because no-one was taking it seriously in the enterprise space. Its Xserve was seen as a positive step but without a mass-storage solution response was tepid. An Apple-branded RAID system changed the perception of the value of an Xserve. For one thing, Xserve RAID was, gigabyte for gigabyte, pretty much the best value for money on the market and marked Apple as a serious player for corporate IT.

So really it was always more of a "trojan horse" product (if you’ll excuse the terminology). Having a serious enterprise storage option meant that Apple was talked about alongside other enterprise storage vendors. When entering a new market you don’t necessarily have to beat them — joining them is an important first step.

Now Apple is taken seriously in the enterprise space and the Xserve is regarded alongside server solutions from big-iron vendors in the Windows and Linux markets (particularly in education, which has always been receptive to Apple but was slipping to the other side). To that end, the deletion of the Xserve RAID indicates that the product served its purpose.

Which gets me to the second assumption. I really don’t think Apple ever intended to make a profit from Xserve RAID itself. Given its relatively small volumes in the market the Xserve is aimed at, there’s little chance it was making much money at the price it introduced the system. It’s much more likely that the RAID was what retailers call a "loss leader" designed to get people into the shop to buy something more profitable. Like an Xserve and some OS X Server licenses. Apple’s lack of investment in Xserve RAID (the system discontinued this morning is startlingly similar to the ones introduced four years ago) indicates the company’s commitment to the line was slender all the way along.

So if Apple saw the Xserve RAID as an investment rather than a profit centre, what could be the catalyst for discontinuing it? Not a lack of profit. More likely some other market indicator ticked over to let Apple know the product had served its purpose. I don’t know how many Xserve RAIDs were sold, and Apple’s not likely to tell me (Apple’s spokesperson had not returned a call asking for comment at time of writing). But I don’t think unit sales or revenue were the markers of success Apple was looking at.

So does the deletion of the Xserve RAID indicate that Apple’s push into the enterprise space has failed? Unequivocally, no.

At the same time as deleting the Xserve RAID, Apple began selling mass storage units made by respected enterprise vendor Promise. These units have already been certified to work with Xsan 2, which Apple also announced this morning. In other words, the demise of Xserve RAID isn’t the news — a new partnership between Apple and a serious player in the enterprise storage market is. Now Apple’s offering in the large-scale storage space can evolve with the market without Apple having to commit extra resources, beyond ensuring that Xsan continues to work. Other storage vendors, who might have been put off by the prospect of competing with Apple previously, will likely sign up to have their products certified for Xsan as well now.

More partners means more customers won’t feel they’re locking into a single-vendor solution — an extremely important consideration in the market we’re talking about.

Why does any of this matter to you? Chances are you weren’t about to go out and buy a server with 4.5TB of storage attached to it any time soon (although you might have been). Nonetheless, this development is a positive one for all of Apple’s customers.

All of us know, anecdotally, that Apple has been increasing its marketshare lately. Vista gets nothing but bad press, sales on the Windows side of the market are flat, while Apple’s sales figures continue to defy gravity. All of us know more Mac users than we did a few years ago. Nonetheless, when the figures come out, Apple sits stubbornly in the single digits. Why? Because the people who buy 1000 computers at a time — the IT managers from corporations and the like — still buy Windows boxes, and that skews the numbers. Those people won’t buy Apple boxes because they don’t want to be stuck in a single-vendor situation and they want to make sure the clients they buy work well with the servers they buy.

Should Apple make some inroads into the enterprise space — not necessarily even very big ones, but just a few serious blue-chip customers buying a few thousand Macs — it can change the numbers a lot more rapidly. A significant shift in marketshare changes the perception of the company at all levels, from enterprise right down to lazy web developers who only make their sites work in Internet Explorer 7. And that improved perception means more Mac-compatible products and more support for all of us.

So cheer up — Apple’s partnership with Promise means your bank’s online site might just start working properly with your Mac one day.

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