AUGUST 5, 2003
SPECIAL REPORT: APPLE'S STRATEGIC SHIFT
Picking Apple as a Server Solution
[Page 2 of 2]
WEB EDGE._ For Greg Maynes, principal at Maynes Associates Architects in Pittsburgh, such compatibility is a major selling point: Most of his clients, who hire his seven-person firm to design structures such as bus terminals and subway stations, use Windows. But Maynes says he has tired of PCs, which in his experience freeze up frequently, lose files -- and require too much of his personal attention. "I never wanted to be an IT person," he says. "I wanted to be an architect."
So Maynes plans to begin switching his company to PowerMac G5 workstations -- which will finally make Apple competitive with Windows PCs in terms of processor power -- in the fall.
Some experts expect a proliferation of Web-based applications -- essentially, an alternative to installing software onto every desktop -- to make Macs a more viable corporate resource. For instance, when New York-based Target Health, a pharmaceutical research company that currently uses PCs, puts its custom-designed applications that manage projects and clinical trials onto the Web in mid-2004, it will likely switch to Macs, says Chief Technology Officer Joon You.
STICKING WITH LINUX?_ Although Apple's PCs sell at a premium, they require less maintenance and support, Joon figures. He says Target Health will thus be able to add to its computer resources without adding to staff -- something he wouldn't be able to do with Windows gear, which he says requires more hand-holding. Apple is noticing the same trend with Xserve: "We've seen sales go well beyond our traditional markets," declares Tom Goguen, Apple's director of server software.
Many analysts aren't impressed yet. They point out, for one thing, that corporations would more likely switch to computers that run the malleable Linux operating system than to Apple products. "Savvy IT people know how to buy a cheap Linux server," says Frank Gillett, a Forrester analyst.
As Linux improves and supports more applications, many corporations might find it better and cheaper than Panther -- which isn't even out yet, adds Gordon Haff, senior analyst with IT researcher Illuminata in Nashua, N.H. Many customers might also prefer a more open operating system to Apple's proprietary version, says Bruce Kornfeld, director of worldwide enterprise marketing at Dell (DELL ), the market leader in PC servers.
PERCEPTION PROBLEMS._ And even though Apple's corporate products are solid and competitively priced, its marketing efforts are modest -- with more focus on word-of-mouth rather than a full-fledged ad campaign. Of course, guerrilla marketing may make more sense than an expensive head-on campaign in an environment where the perception is that Apple's products are all premium-priced and that its gear is hard to integrate into existing networks. "Having the technical specifications doesn't mean it's going to be a successful product," says John Sloan, an analyst with IT consultancy Info-Tech Research in London, Ontario. For now, says Apple's Goguen, the primary marketing strategy in the corporate market "is to get the product right."
To reach new business markets, Apple must also develop better distribution, says Rob Enderlee, an analyst with tech consultancy Forrester Research. Today, many large customers will use powerhouses such as IBM (IBM ) for all of their technology needs. But Apple's Grossman insists that small businesses prefer to work with smaller resellers -- and he adds that Xserve has attracted a lot of distributors that traditionally have specialized in Unix.
Still, Apple needs a partner that's big in technology services to expand its reach, says Enderlee, who mentions Unisys (UIS ) as one possibility. It will take such moves, at a minimum, to get some analysts to stop doubting Apple's commitment to the corporate market.
OXYMORONIC STRATEGY?_ One question Apple may have to answer -- though no one seems to hassle rival Microsoft over the same issue -- is how it can focus on business customers even as it morphs into a consumer-electronics company like Sony, says Haff. The biggest question, he adds, is whether Apple is prepared to devote the resources it will take to develop a bigger corporate business. "I call their enterprise strategy an oxymoron," says Charles Wolf, an analyst with Needham & Co. "They don't have an enterprise strategy."
The evidence that Apple does is mixed, for sure. Still, it's lining up partners such as Sybase (SY ) to provide software that will run on XServe rather than do the job itself -- the opposite of its apparent strategy in the consumer Mac market -- says Steve Bertges, vice-president in charge of Macintosh at Sybase. And that's drawing many enterprise software companies, such as PeopleSoft (PSFT ), to Apple's side.
Some existing Mac customers will like it just fine if Apple doesn't attract a big contingent of new believers. "If everybody in the world, especially our competitors, were using Apple's hardware, it would make our job more difficult," says RiskWise's Moog. Of course, he won't have to worry about that unless Apple's corporate strategy starts building a bit more momentum.
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By Olga Kharif in Portland, Ore.
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