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Summary:

Given the stunning growth of iPod phenomenon and general good fiscal health of Apple, it is easy to overlook some of the progress the company is making in the enterprise markets, especially when it comes to storage. According to some reports, Apple’s storage products have been […]

Given the stunning growth of iPod phenomenon and general good fiscal health of Apple, it is easy to overlook some of the progress the company is making in the enterprise markets, especially when it comes to storage. According to some reports, Apple’s storage products have been selling like hot croissants on a cold Parisian morning and at the end of “second quarter of 2005, the company had shipped 76 petabytes of storage.” The sad part is that Apple itself doesn’t keep people upto date on its progress in these markets.

Robert Cox, vice president of research, who tracks the storage business for Gartner says that in 2004, Apple did about $78 million in storage sales and were #12 ranked storage vendor in the world, but by end of 2005, Apple’s storage sales were around $185 million. The company had moved into the 10th spot overall. “They have done a good job of selling into the small and medium business market,” says Cox. (South Park uses Apple storage by the way.)

According to his estimates, nearly 40% o XServe RAIDs are connected to non-Mac OS servers. “They are in a good and a growing market, and have done a good job of building a reliable and easy to use device from commodity components,” says Cox. The network attached storage business is a $14.5 billion a year business, and the $185 million doesn’t exactly seem that very much. Their high quality products, are better priced compared to other name brand players such as EMC, Dell, HP, Sun and even Net App.

Do the math: the gigabyte-per-dollar ratio of Xserve RAID is the best in the world for Fibre Channel storage, and trumps most SCSI storage solutions as well. Xserve RAID offers up to 7TB of high-performance redundant storage at under $2 per gigabyte — a fraction of the cost of storage from Dell, HP, Sun or IBM.

Cox thinks that company will continue to do well in 2006 and should move up a notch or two in the world wide rankings. Apple, will have a tougher time, thereafter. It needs to transition from current generation technologies such as SATA and embrace SAScsi, a new architecture that can give Apple a big leg-up against fiber channel based storage devices. I wonder why Apple shies away from prompting well in the storage and server markets.

By Om Malik

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  1. It’s almost as if the storage business was an afterthought. In other words, Apple needed storage for it’s iTunes Music Store business and thought what the heck, we’ll sell it to others as well.

    Anyway, Apple still hasn’t figured out it’s direct-to-business and direct-to-government sales mechanisms. Apple seems to be trying to attract businesses through the retail store – that might work for the 1-15 person small business. But they need a bigger initiative and dedicated salespeople for anything bigger. Maybe it’ll come after they move XServe over to Intel.

  2. It seems that Apple gave up on the business market years ago and simply doesn’t have the focus or the knowledge to leverage itself into the typical IT department world view. Its marketing department does consumers as well as anyone in the world. Its educational sales people can hold their own. Does it even have a B2B marketing staff?

  3. Tom Shaughnessy Tuesday, March 7, 2006

    Just as we see Apple making very sure steps in the iPod and residential computer spaces, their offerings for enterprise buyers are very precisely targeted to places where they can be successful. They are a far more prudent company today than ever before. The XServe and XRAID products are being promoted very effectively in markets where Apple has a sphere of influence upon which to build. This article might have read how Apple was an ineffective competitor against (insert name) in the data center storage space, but instead it tells a story of wonderful success and poses a question of why they are not active in another market segment. They will enter that space when their leverage becomes sufficient and they feel they can profitably participate. This enterprise is firing on all cylinders in every space in which they choose to participate. They are among the most dangerous competitors in the market today.

  4. on the corporate level sure .. but not on the consumer level

  5. Apple’s problem from the inception of the Macintosh is that is has never been able to market their products successfully. EVERYONE that takes the time to examine Apple’s hardware and software offerings acknowledges that Apple’s products are superior in almost every way to competitors products: from overall quality; to ease of use; to overall cost of ownership. Yet, ask the common man their opinion or survey that opinion based upon marketshare and Apple falls woefully short. When one compares Apple’s OS offerings vs Microsoft’s OS – it’s not even a competition with Apple winning hands down on all points except one. Microsoft is KING at getting people to buy their products despite their products’ failings. Apple struggles to sell to anyone not already converted.

  6. We upgraded from NetApps to XServe RAIDs 2 years ago. The yearly cost of the service contract on the NetApps was more than the cost of a brand-spanking-new XServe RAID with a 3 year service contract. We now have 4 of the Apple arrays, connected to Sun servers and running mission-critical stuff like Oracle databases.

    Support (a very important consideration for storage) is also very good. When a drive failed a month ago, we had the replacement within 4 hours. And $1000 for 3 years is a steal compared to what everyone else charges.

    The XServe RAIDs are not perfect. The units are actually two independent non-redundant halves, not a single redundant unit as the product brochures try to mislead you into believing (the power supplies, fans and hard drives are). Their performance monitoring leaves to be desired (the only way you can know how hard they are pushed is by pointing a webcam at the front panel lights, as that information is not available over SNMP.

    Still, there is nothing even remotely comparable for less than twice the price.

  7. Apple’s xserve solutions for local and small market gov is readily availiable through resellers like me. 1800 625 5468 x 4325

  8. Microsoft started out with the consumer side and worked their way up, so if Apple can get significant consumer market share, then it might be possible to do the same thing.

  9. Daniel Golding Wednesday, March 8, 2006

    Its an enterprise product and those make Steve Jobs feel like he just kissed his sister. Apple (and Jobs) need to get over it and start pushing on the server market. Its a back alley entre into the entire enterprise space.

  10. Brick by brick Apple has been building a strong foundation to make ready for a hurricane of business which is inevitably coming their way. Traditional forms of media marketing are incredibly expensive. Apple has found a unique way of creating impressions in the minds of consumers, they earn it through great products that are very reasonably priced when all factors are considered.

  11. Apple has a dedicated sales force for enterprise customers. It includes both Account Executives (AEs) and Systems Engineers (SEs). The same is true for the federal government market. They also have a special enterprise tech support line for AppleCare that bypasses the normal consumer-oriented front line call screeners.

    Apple doesn’t yet have high-end or midrange server products like IBM, HP, and Sun, so they compete where they can.

    I think they are making sure they can walk in the enterprise market before trying to run. Seems like a smart way to go about it.

  12. what media campaign strategy do they use?

  13. Joseph Scott’s Blog Tuesday, June 6, 2006

    Apple As A Storage Vendor…

    Om comments on Apple’s storage sales of the Xserve RAID unit. Although sales of the unit seem to be do well, especially considering that this was a market that Apple has zero presence in only a few years ago, many analysts are frowning on Apple …

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    If U Love Music cOME and Get Some … Dj Cammy!!…

  15. Well is about time! It looks like Apple now ships to the US Military and USG overseas who have an APO or FPO address. They use a third party shipper called APO Box to handle customs and US Postal service paperwork for its military sales. I am glad to see a major corporation like Apple recognizing the need to mail to APO/FPO addresses.

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