Apple Bails on Storage Hardware

By Drew Robb | Posted June 11, 2008

Apple, it seems, can do no wrong — the iPod, the iPhone, the Mac, Xserve RAID — well, maybe not Xserve RAID.

After a couple of years in the business, Apple (NASDAQ: AAPL) has decided to leave storage hardware manufacturing to others. It will continue to make storage software, but hardware is not part of its future plans.

After launching the Xserve server a few years ago, Apple followed it up with an Xserve RAID box as the hardware component of an Apple based SAN known as Xsan. Apple Xsan has recently been updated in the form of Apple Xsan 2 software, and Xserve continues to be sold. However, Xserve RAID boxes are no longer being made, though the company will continue to supply disk drives to existing customers.

"We will continue to sell the 500 and 750GB Xserve RAID drive modules," said Apple spokesperson Jennifer Hakes. "For new RAID purchases, we recommend the Promise VTrack E-Class subsystem."

Promise Technology, of Milpitas, Calif., has been in the storage hardware business for some time, providing RAID array systems. It now makes a custom version of its storage subsystem that is only available through Apple or an Apple authorized reseller. As such, it comes with built-in firmware created for Apple customers.

"Apple is offering the Promise VTrak E-Class RAID Storage Subsystem as the only qualified storage solution for the Apple Xsan 2 and Apple Final Cut Studio 2," said Mike Joyce, senior director of marketing at Promise. "It is available exclusively through the Apple Online store and through Apple authorized resellers."

One Analyst's View

So what does this all mean? Ezra Gottheil, an analyst at Technology Business Research (TBR) of Hampton, N.H., said Apple is transitioning its storage focus from hardware and software to purely software-based.

"Apple is continuing to support and provide additional drives for Xsan 1 units, and offers Xsan 2 as a pure software product," said Gottheil. "From now on, though, Apple is partnering with Promise Technology to provide the boxes."

Is this an exclusive arrangement? Certainly it is from the Promise side, but maybe not for Apple. After all, Gottheil points out that Apple already has in place relationships with several Fibre Channel controller and switch vendors such as Brocade, QLogic and Cisco. These relationships were forged in the early days of its initial Xserve/Xserve RAID launch.

"Apple is not saying whether it will support other manufacturers in the future, though it does support a range of controllers from various storage vendors," said Gottheil.

To his mind, the Promise deal makes sense as it fulfills two purposes: to get Apple out of storage hardware manufacturing, while providing a stable storage platform for the many professionals who depend on Apple for their day-to-day endeavors. The company's biggest commercial market is what is termed creative professionals. This includes graphic artists, photographers, musicians and video professionals. According to Gottheil, it is this last group where Xsan is most important.

Apple gear and applications, for instance, are dominant in the entertainment sector. They are used to edit and store a lot of video in the film and broadcast industries and for delivery of content over the Internet.

"Xsan allows these users to store and move around huge files, to expand storage as needed, and to present to users the structure they want," said Gottheil. "Apple emphasizes the fact that users at regular Macs and heavy-duty Mac Pros see the Xsan as just network drives, with virtually no user interface overhead."

Thus the appeal of the Apple deal with Promise. It is a well known fact that Apple users prefer to have their systems play with other Apple gear. The vast bulk of Xserve, Xserve RAID and Xsan customers are dyed-in-the-wool Mac users. By partnering with Apple and being given the inside track in terms of APIs and firmware, Promise is essentially cornering a small but not insignificant segment of the storage landscape.

So that's how it plays out on the Promise side. As for Apple, the move appears to be all about profits and margins.

"Across Apple's whole business, it looks to add maximum value and thereby extract maximum margins," said Gottheil. "They came to believe they couldn't differentiate from other storage hardware vendors through hardware, but they also believe that they are best able to deliver value through storage software."

Going Forward

Going forward, then, Apple now focuses on Xsan 2, touting it as an "easy to use, high-performance, enterprise-class SAN file system for Mac OS X." The company has worked, for example, to make it easier for first time users to set up and quickly deploy a SAN. This was achieved by revamping the administration tools in Xsan 2. Administrators, for instance, now can pre-set volume workload settings in order to optimize streaming of large uncompressed HD video as well as small files.

In addition, MultiSAN allows users on a single workstation to access multiple SANs at the same time. Newsrooms, for instance, may have one SAN volume for production and another SAN volume for broadcast. This feature makes it possible for both to be accessed from the same server or workstation simultaneously.

Xsan 2 also integrates with Mac OS X Leopard and Mac OS X Server Leopard, as well as Promise-based RAID storage. As such, it can leverage core Mac OS X features, such as Spotlight, which helps when searching across multiple SAN volumes. Similarly, the Server Assistant in Leopard Server eases the setup and configuration of SAN volumes. Other Leopard Server bells and whistles make it possible for Xsan 2 to support clustered file systems, as well as lessening the impact of a service outage. Xsan 2 retails for $999 per node.

Meanwhile, the Xserve has also had a recent upgrade. This 1U rack-optimized server is twice as fast as its predecessor and includes unlimited client licenses for Mac OS X Server Leopard. It has two quad-core 3.0 GHz Intel Xeon processors, up to 32 GB of memory and a healthy maximum of 3TB of internal storage. Pricing starts at $2,999.

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