Apple is getting out of the server business - no, don't act surprised: it's been selling servers since 2002. But after eight years trying -- well, not actually trying very hard -- to sell the rack-mounted Xserve, it's quietly announced [PDF] that, after 31 January 2011, it will no longer sell them. It's "transitioning away", apparently.
In fact, the writing has been on the wall for a while: the company didn't bother to upgrade the systems with Intel's latest six-core Xeon 5600 (Westmere-EP) architecture -- which would have been fairly simple to do from an engineering perspective since they're socket-compatible with the four-core Xeon 5500 (Nehalem-EP) products.
You can replace your Xserves with a Mac Pro or Mac Mini, according to the Transition Guide to which the link above points, and "Apple will honor and support all Xserve system warranties and extended support programs", while it will continue to sell "Drive Modules for Xserve through the end of 2011 or while supplies last." After that, you're on your own.
The big plus point for those who bought into the idea was the end-to-end architecture, with one vendor making hardware and software, providing only one throat to choke. Other than that, the Xserve has few advantages.
Yes, it's powerful but no more or less so than any other server maker's gear. It looks very nice but then, who cares? No-one looks at a server -- and if you do, you'd rather see something utilitarian where you can get your hands on the essentials quickly than a pretty fascia.
Apple has reportedly made inroads into graphics and media organisations, who like the company's disk arrays and clustered file system. However, abandoning those users and suggesting they deploy Mac Pros, which don't have the kinds of redundancy that a server, is a bit of an insult. At the top end, they're powerful enough but they're not servers.
What's clear is that Apple wasn't making enough money out of the servers and, since it can seemingly milk its shiny cash-gushing gew-gaws until the cows come home, why bother making dull old servers?