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From the article: "A survey of 1,200 Xserve customers conducted by the Enterprise Desktop Alliance found that 70% of Xserve customers say Apple's announcement will have no impact on their organization's decision to buy new Macs."

I think a more interesting look is that 30% of XServe customers say Apple's announcement will impact their organization's decision to buy new Macs (or didn't respond).

I'm wondering who the CTO is at these companies that allowed IT to go with Apple servers. I'm not hating on Apple, I'm just saying that when you think "corporate IT" do you think "Apple"? The last type of company that you want to work with in IT is one that has a nasty habit of surprising its customers every 6 months. You want a big, dependable, boring company.
If you do media in a big corp, the Xserve was a pretty good box for that side. It also (up until Windows 7) made a pretty good box for a mixed educational environment.

My biggest problem with OS X Server isn't the loss of the Xserve, it is the old Samba.

They were hardly large deployments. It's telling that their enterprise customer quote was from the "IT director at Washingtonian.com, which runs two Xserves to support a website".
Apple's decision didn't surprise me much. Yeah, I thought they could have handle it a bit more tactfully, but the decision to drop the XServe line didn't surprise me.

Why? Because ours is awful. We bought it to be the office do-everything server. It ended up doing roaming profiles, file sharing (poorly, since we also have Windows machines and that seemed to be a constant headache) and Time Machine backups (also a major headache). At one point, it did Gateway and DNS stuff, too, but it couldn't really do what we wanted, and we went back to Linux for those.

And then recently we ended up moving to a NAS for the file serving and Time Machine backups, and that's been much nicer.

We tried to hook a tape drive to the XServe to make proper backups, but it never worked right from the start. We ended up having to pick a subset of what we really wanted to back up, and then it kept having issues even then.

We were also told that we could virtualize Windows on it (a few instances) but it was quite obvious that it didn't have the power for that before we even really got started.

disclaimer: I support Apple products as a main focus of my business.

If you look at what Steve Jobs has said about the enterprise market, it's pretty much that the users of the product aren't the people making the purchases.

For this reason, Apple is making inroads on the other end - the C-level exec buys an iPhone, loves it, and starts buying other Apple gear, which IT grumbles about but integrates.

Apple cares about IT as a function of interoperability, not as a place to take over - it's fundamentally boring.

The biggest "Enterprise" related feature gains made by Apple in the last few years are all iOS management and email integration related, not desktop computer support related.

Desktop computing will live on, it just won't be where all the whiz-bang neat stuff happens, on any platform - witness all the mobile device and new interface (Kinect hacks anyone?) innovation, whereas Mac OS X 10.6 isn't all that different from 10.4 or Windows 7 from XP.

Anyone buying Xserves was already irked. OS X just isn't there QA-wise or support-wise (oh, gee, wasn't it cute when they broke NFS permissions until the next release?) for anything like a traditional server role. It's just not a priority for Apple except where it was a necessity for selling Mac clients.

  Without getting too wonky about the finer points  
  of "blade servers," the Xserve is essentially a  
  high-powered Macintosh computer with additional  
  features to help it network with other computers or  
  host websites.
Without getting in to the finer points of almonds, the peanut is a legume whose seeds grow underground.
We sell to and support thousands of hosting customers. We have two customers running Virtualmin licenses on XServe machines, and only one is exclusively a Mac OS X shop. The cost of running XServes is simply so much higher than running many other quite high end rackmount server products from Dell, IBM, HP, Sun, etc., and as a server OS Mac OS X is way behind Linux. apt-get or yum alone makes Linux vastly superior when managing a large number of servers, but it's also worth noting that Mac OS X has historically had broken NIS, LDAP, PAM, NFS, and SMB/CIFS integration, sometimes for months at a time. I had the task of integrating Mac OS X in a client role in a mid-sized company a few years back, and it was not pleasant. Damned near nothing network-related worked, and the Macs ended up being off-the-grid in most regards because they simply couldn't play with the existing authentication and file sharing options.

Also, real servers have a lifecycle measured in years, and very predictable availability. Dropping them with a four month notice is just a slap in the face to IT guys who have to deal with the fallout. I don't have a problem with Apple leaving the server market (since they were never very good at it), but it's kinda crappy to their customers to do it without a reasonable amount of notice.

For me this was foreseeable, a guy I know bought a PowerMac G5 in 2006, an expensive high end workstation, generally this type of machine can be used for 5 to 7 years without much problems, if you upgrade the hardware it can last even longer, although you probably won't try to use it to deal with performance demanding taks, Apple slapped him in the face, he cannot even run Snow Leopard in a four years old workstation.
Apple announced the PPC -> Intel transition in June of of 2005, and the first Intel macs were release January 2006:

http://en.wikipedia.org/wiki/Apple–Intel_transition

The writing was on the wall for anyone looking to keep a machine for a long time.

True, but it's a 4 years old machine, I do not know about you, but I do expect that a Workstation will be supported for 5 years at least, maybe this got lost in the world in which a guy buys a iPhone every year, back them Apple had no iOS devices, it was the Mac and iPod (which was a fairly simple environment), so I disagree that it was so simple to predict about that 4 years in the future you would be unable to upgrade to a new version, Apple did not said back them that you would be unable to run the a new version of the OS in 3 and a half years.
What does Apple use inside their datacenters?

Any one know?

It always felt to me like Apple was targeting small shops and departmental servers. I've never heard of anyone having a real xserve datacenter, but I've heard of tons of companies running on xserves for infrastructure.
Yeah, OSX Server is perfect for something like that. I was just curious, I sort of figured iTunes ran on XServes in various data centers.
I doubt Apple would limit their internal technology to the configurations they offer on the market.

They're free to run OS X Server on non-Apple hardware, even if buyers aren't supposed to, and wouldn't have any trouble getting OS support. They could use off-the-shelf commodity-priced rack hardware, or they could do like Google and have custom rack PCs made to spec. Or they could virtualize OS X.

And they're free to run WebObjects on non-Apple hardware. (Actually, I think anyone can do that, because it's Java.)

I don't think they use Mac OS X Server that widely. We were told their deployment platform was Oracle Linux, which is a rebranded version of RHEL.
A combination of IBM and Sun / SNOracle.
I thought most Xserves were sold to be used in media situations, i.e. running final cut asset sharing systems and render farms for compositing etc etc. The film industry will surely be pissed? Then again, just ask all the people who were devoted Shake users