Will Apple enter the server business?

In a world of speculation, this week’s most interesting rumor says Apple may plan to enter the server business once again, with powerful systems running its own Apple Silicon chips.

It’s hard to dismiss the claims, particularly as Apple is already in the server business, with its Texas factory manufacturing servers for its Private Cloud Compute (PCC) cloud intelligence system. While those servers are only used internally —or externally if installed at third-party data centers for use with Apple’s ecosystem of products — they are still servers.

Apple is already in the server business

It’s also a business Apple has been in before. Many years ago, around 2002, I visited Apple in Paris, where the company demonstrated its Xserve and Xserve RAID systems. These were particularly aimed at the video and music industries and became quite widely used in those sectors. Apple discontinued Xserve in 2011, because the product sat outside its broad consumer-focused strategy.

Things were different then. You see, today’s Apple has billions of users. It has a fast-growing reach into enterprise tech — SAP recently updated its fleet of 60,000 Macs to macOS 27 on the very day the OS shipped, and there are hundreds of thousands of Macs in use at businesses worldwide. Apple has hundreds of millions of iPhones in active use across business. Apple even has the silicon to power these things.

The Apple Silicon advantage

You can’t ignore the computational advantage of Apple Silicon. The first leaked benchmarks for the M5 Ultra chip used in the new Mac Studio are incredibly impressive, with multi-core performance at an astonishing 52,516. That’s amazing performance from a Mac that costs an estimated 8 cents an hour to run at full capacity. 

Now imagine that price/performance ratio stashed in a server.

You don’t even need to imagine it, because MacStadium, AWS, and others already use Macs in server farms, with great success. MacStadium CTO Chris Chapman once told me that Apple Silicon is so power efficient his data centers would tell him the Macs he had racked with them were not using enough power for the space. (Data centers sell space by the square foot and calculate energy costs within that calculation.)

Making cloud cheaper and more secure

The computational performance per watt is an advantage to any user, but the cost benefits rack up pretty fast when you have a thousand machines racked up on the data farm. Apple even has a server operating system waiting in the wings — or did until it stopped offering macOS Server four years ago. 

Apple’s existing server production is focused on Private Cloud Compute. That system is impressive, (a) because Apple has opened it up to security experts to confirm it is secure, and (b) because it delivers data and privacy security equal to what its end-user platforms provide. 

But, as data centers blossom across Terra Firma, there’s a growing recognition of the need for sovereign AI, on-premises AI, and private AI. Think of it this way: We already know Macs can run some of the world’s most powerful LLMs very, very well. What’s wrong with introducing Apple Silicon-based servers to do the same thing? These things could even offer companies access to their own white-label private builds of Apple Intelligence, though I consider that unlikely. 

Why the speculation makes sense, and why it doesn’t

So, I see lots of reasons why speculation that Apple may re-enter the server market makes sense — though it may not be in a huge hurry, as the original claim is that these servers will run M8 Ultra chips. (Mark Gurman thinks it may be an M7 Ultra). 

Of course, speculation and conversation don’t always become fact. Merely because Apple is talking about servers again doesn’t mean it will advance those plans. 

Former Apple business-focused product marketing executive Todd Dailey doubts these plans. He says Apple is far more focused on consumer markets than enterprise. 

He also points out that if it were to offer servers, the company would need to consider providing same-day tech support and more flexibility around OS upgrades, adding that the business may not be big enough to justify the cost of implementing the plan. 

That doesn’t mean Apple isn’t considering it, just that once you bounce the idea through a few real-world weeds there may be obstacles to making it happen.

Is it time for iCloud Ultra?

I do think there are signs Apple is taking enterprise markets more seriously. I also think that as PCC deployment expands, it makes sense for Apple’s server teams to build a product road map for the future of PCC servers like any other Apple product, even if they are only used to support its own server-side AI.  

But I also think that if the company were to go ahead to make this happen, the solution would be aimed at developers and businesses seeking a uniquely private way to deploy sophisticated AI outside of the thrall of the frontier models, chipping a little more business away from those over-leveraged entities as it does. 

The thing is, if that’s the case, then is it servers Apple is thinking of building, or server farms offering hosted services for a price? An iCloud Ultra service for developers and enterprise users may perhaps make more sense. I guess we’ll have to wait and see.

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