Xserve puts Apple in a position to wrestle some market share from Linux, which is one of the most popular operating systems for running Apache Web Server. Apache was run on 64.4 percent of Web servers in June, according to researcher NetCraft. But Microsoft Web server products have been slowly gaining on Apache. "This certainly places Apple head-to-head with Linux, considering they did release the benchmark metrics about how well it did with Apache Web Server," Deal said. "I think the Unix-based operating system will attract some Linux users. But I can certainly see battle lines being drawn between Linux users and potential Xserve users." Xserve's most important role for Apple could be bolstering the company's position in digital media streaming. "The majority of (digital) content is created using QuickTime," said Gartner analyst Paul-Jon McNealy. QuickTime is Apple's media creation-and-playback technology that competes with RealOne from RealNetworks and Windows Media from Microsoft. But most of that content is then converted to the competing formats, which have more market share than QuickTime. The fact that there are different formats means that consumers must use multiple players if they want full access to all the streaming content on the Web. By offering a rack-mounted server with QuickTime streaming software, Apple is bolstering its position for a stronger head-to-head competition with Microsoft and Real, say analysts. That would also play into Apple's strategy to back the MPEG-4 video technology over proprietary formats. MPEG-4 is the successor to MPEG-1 and MPEG-2, technologies instrumental in delivering digital broadcast transmissions over cable, satellite and the Web. MPEG-2 is the video standard adopted by Hollywood for DVDs. MPEG-4 also is seen as a possible successor to MP3, the hugely popular audio format for compressing music digitally. Apple introduced QuickTime 6, which fully supports MPEG-4, in February. But Apple delayed releasing the new version because of a licensing scuffle with MPEG LA, the group holding patents on the technology. Then, in an unexpected turnabout, Apple last month released a QuickTime 6 Preview, with chief executive Steve Jobs suggesting the licensing issue might soon be resolved. "The preview release of QuickTime 6 is an important move because it suggests that there has been some compromise, or they're pretty sure there's going to be some compromise, on the part of MPEG LA in terms of changing the proposed licensing terms," IDC analyst Susan Kevorkian said. "For the creation-tools standpoint, QuickTime 6 is pretty neat," McNealy said. "MPEG-4 could help Apple because it's going to give them a huge leg up because of the advantages of the content creation area." Using QuickTime to do authoring for MPEG-4 offers advantages for "reducing the expenses incurred in actually producing content in a given format and then delivering it," Kevorkian said. "At the end of the day, that's what we're talking about when we're talking about a universal format that all the content providers use and every consumer can view on their desktop." Phil Schiller, Apple's senior vice president of worldwide marketing, sees moving beyond proprietary digital media formats as essential for the medium's success, particularly on the Internet. "Imagine if you had to buy a different TV for the different channels you want to watch," he said. "What if you...had to have three TV sets depending on whether you were watching NBC, ABC or CBS because they each used their own formats? What a mess that would be."
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