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Apple
in
Enterprise
–
a
cost
model
analysis
In
17th
century,
an
apple
changed
the
world.
In
21st
century,
Apple
sets
out
to
change
it
again…
Niranjan
Nandakumar
(nnandaku@syr.edu)
iSchool
at
Syracuse
University
05/01/2008
Executive Summary:
shaping the personal computing market over the years. Although they have had their
share of ups and down, which has seen Microsoft gaining significantly over them, a stage
has reached now, where Apple can boast of entering the enterprise market through its
This paper is an attempt to build a cost model for analyzing the enterprise market
solution in the IT division of a small, mid-size and a large organization. The analysis has
been done over three years in a typical IT investment, and the total costs incurred in both
solutions have been calculated based on hardware, software, maintenance and IT staffing
costs.
Results have been obtained for two scenarios – a mid-size organization with an
employee base of around 500 and a large organization with 10,000 employees. Based on
the analysis, it has been found that although the hardware costs in case of an Apple
solution can be high, the software licensing costs incurred in a Microsoft-based solution
can negate this. In most organizations, this high hardware costs has been the cause for
reluctance to purchase Apple products for its IT deployments. The reliability of Apple
Mac computers and its dependence on the UNIX platform can actually reduce this cost
difference even further, through decreased maintenance costs and lower number of
This paper further tries to throw light on some of the technical challenges that
still stand in the way of Apple from successfully entering the enterprise market.
Table
of
Contents
Introduction: ................................................................................................................................................................4
Analysis
of
Technology:...........................................................................................................................................5
Scope
of
this
project:.................................................................................................................................................7
Hardware
used
for
the
cost
model
analysis: ..................................................................................................8
Assumptions:................................................................................................................................................................8
Scenarios
Analyzed: ..................................................................................................................................................9
Analysis
of
the
results:..........................................................................................................................................13
Sensitivity
Analysis: ...............................................................................................................................................14
Sensitivity
Charts: ...................................................................................................................................................16
Conclusion:.................................................................................................................................................................17
Insights
from
the
cost
model: ............................................................................................................................18
References:.................................................................................................................................................................20
Appendix
A:
Technical
Specifications:
Apple
Solution............................................................................21
Appendix
B:
Technical
Specifications:
Dell
Microsoft
Solution...........................................................24
Introduction:
For long the enterprise IT infrastructure market has been dominated by PC and
Microsoft Windows based solution for server infrastructure and RAID subsystems. In the
recent years, the emergence of open source Linux and Apple solutions have been seen as
a threat to this dominance. This paper attempts to build a cost model for the IT
infrastructure requirements and compare the cost effectiveness of Apple Solution with the
Although attempts have been made to deploy Mac as a replacement for PCs as
user desktops and laptops, there has been very little progress in breaking the barrier at the
points out1, “Clearly, the price tags for PCs are lower -- at least at the low end. However,
we recently tested the speed of high-end Macs and PCs, and they're comparable -- for
comparable prices -- in many areas. So, it's probably most realistic to say that while the
cheapest PCs cost less than the cheapest Macs, the cheapest Macs are probably
Once seen as a computer for marketing and media companies, Apple has started
to come out of its veil, spreading into a wide variety of business environments through its
highly reliable product line and competitive pricing. The sections that follow throw light
on some of the technological competencies of Apple that are compared to the existing
Windows-based solution and finally present the results of the cost model analysis,
1
“Mac vs. PC: The truth About TCO” – James Maguire, 11/22/2003,
http://www.newsfactor.com/story.xhtml?story_id=22738&page=1
Analysis of Technology:
As stated earlier, Apple has made a substantial improvement over the recent
years, in an attempt to gain an entry into the enterprise market. The solutions that are
being offered in the server and storage sectors have grown to match the already existing
infrastructure. The Apple server solution - Xserve2 - provides enterprise class server
solutions with up to 8-core processing power and 3 TB of internal storage. Apple also
provides solutions for storage, through its Xserve RAID with storage capacity of up to
10.5TB in each 3U enclosure. Together with third party hardware such as Promise V
Trak RAID subsystems3, and Xsan4, an enterprise-class storage area network (SAN)
solution, Apple competes with the existing solutions for IT infrastructure in large and
small organizations.
In the software side, its Mac OS X Server (Leopard) has had proven track record
of seamlessly integrating with the existing Windows-based solutions as support for small
work groups within large organizations. The table below briefly illustrates the features
that a Mac OS X Server offers and the analogous features in the existing solutions.
2
“Xserve” - http://www.apple.com/xserve/
3
“Promise RAID storage solutions” -
http://store.apple.com/AppleStore/WebObjects/BizCustom.woa/9084006/wa/PSLID?nnmm=browse&mco
=A58D4EFB&node=home/shop_mac/mac_accessories/promise&wosid=VfVytU3PsyXB2Xl8wcK2pnSaf
Cr
4
“Xsan” - http://www.apple.com/xsan/
5
As Ryan Faas6 points out in his article on “What’s new in Leopard Server”,
“Leopard Server provides easy-setup servers for many small businesses, and includes a
new simplified setup process and systems management interface.” The table shows that,
most of the common applications and solutions required for a complete deployment in the
One of the most notable among the features offered, that requires special mention
is the Open Directory, which is analogous to the Active Directory in Windows based
solutions for directory services. Apart from its ease-to-use interface to add on to the
features that are essential to the enterprise user management, Open Directory
directory server, including Active Directory. The Open Directory master can then
authorize access to services for users whose accounts reside in the directory system to
5
“Technology Overview” - http://cluster.earlham.edu/detail/cairo/doc/xserve.pdf
6
“What’s new in Leopard Server” – Ryan Faas, 10/28/2007, Computer World,
http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9043839
which it is connected via Kerberos6. It involves enhanced directory integration
capabilities with other directory services such as the Active Directory. This can prove
beneficial to small organizations, which typically plug on to their client network, apart
However, even though technologically Macs have proven its competency, there is
a common notion that has been lingering on, ever since Macintosh was launched in 1984
that hardware costs of Apple Computers can be less cost effective than its counterparts.
The cost model discussed in the sections that follow is an effort born out of the curiosity
to understand the real cost margin between Apple solutions and the existing Windows-
based solutions.
which are typically the startups. The migration of a large and established organization to
Apple solutions can prove to be less cost effective. Some of the typical requirements for a
small business organization include user-end services such as – file and print services,
user / directory management, web server, mail server and collaborative services such as
wiki and chat management. The project also targets systems and infrastructure required
for desktop management tools for software deployment, image creation, monitoring and
Dell-Microsoft Solution. More details on the technical specifications of the hardware can
• RAID Subsystem
Assumptions:
In the development of the cost model and its analysis later, there were some
assumptions made. These assumptions will be used to study the scenarios that will be
discussed in the sections that follow. They will then be varied to study the effect of the
assumptions, during the sensitivity analysis, to better understand the cost model and
1. The maintenance costs incurred over the span of three years, in case of an Apple
solution is 40% less than that for a Dell – Microsoft solution. This assumption has
been made due to the fact that Mac systems and servers are highly reliable
2. Due to the UNIX platform and the ease-to-use nature of the Apple solution, it has
been predicted that the IT Staff required to support this would be significantly less
than that for a Microsoft-based solution. For the purpose of this cost model, it will
Apple solution.
Scenarios Analyzed:
To better illustrate the cost model under consideration, two scenarios have been
in the sections below, have been used as the inputs to the cost model and the results have
Scenario 1:
Employee Statistics:
Hardware Requirements:
The total costs over the three years, for Apple and Microsoft solution.
Scenario 2:
Employee Statistics:
Hardware Requirements:
These input variables in the cost model, yielded the following results.
The total costs over the three years, for Apple and Microsoft solution.
Analysis of the results:
From the results and findings of the cost model that was used to obtain the total
costs for an Apple and Dell-Microsoft solutions, it can be seen that the hardware costs for
the purchase of the Apple solution is higher than that for the Dell-Microsoft Solution.
This was expected, due to the higher pricing of the Apple hardware. It must also be noted
that, in most organizations, this initial investment has been the cause for reluctance to
However, the software costs over three years, in case of an Apple solution is
significantly lower than that in case of a Microsoft solution. A high proportion of the
software costs in case of Microsoft go into buying the Client Access Licenses (CALs)
which are priced at $799, for each 20 additional licenses. In case of Mac OS X Server,
the purchase of the Xserve brings along with it, unlimited license version for the server.
This significantly affects the costs for software on Mac. In fact this can also be seen as a
reason for the hardware costs being high. For the technical specifications of server
solution that I have considered here (see Appendix A and B), the costs of the Apple
Xserve hovers around $6100, where as that of Dell PowerEdge R300 costs $2000 less.
The cost difference seen here can also be attributed to the open source support on
Apple computers. For e.g. the SQL Server solution offered by Microsoft can be replaced
The assumptions on the maintenance costs and the reduction in IT Staff, also
proves favorable for an Apple solution, over Dell-Microsoft solution. Hence it should be
noted that, for a large, small or a mid-sized organization, Apple solution proves to be a
the total costs under the scenarios that were considered. It was assumed that there will be
a 40% reduction in the maintenance costs and a 20% reduction in the IT Support staff,
through the deployment of the Apple Solution. In this section these components are
varied to understand how an increase or decrease for these parameters can take effect on
The scenario 2 analyzed in the previous section has been taken as input
parameters for this study. To reiterate the results stated above, under the conditions stated
Case 1:
Case 2:
Case 4:
Case 5:
Reduction in IT Staff - 0%
Reduction in IT Staff - 0%
Case 7:
Reduction in IT Staff - 0%
Sensitivity Charts:
The assumptions that were made to analyze the cost model for a mid-size and a
large organization were varied in the sensitivity analysis section. Seven cases were
considered as shown above and finally the sensitivities of the total costs for Apple
solution on maintenance costs reduction and IT Staff reduction were plotted as shown in
It can be seen from the analysis that, the variation of maintenance costs does not
have a significant impact on the total costs. However, the reduction in IT Staff can cause
a huge reduction in the costs, typically due to the heavy pay cut that is associated with the
same. In a typical industrial scenario, both these might seem unrealistic. A heavy
decrease in the IT Staff is not achievable in a realistic scenario. Same is the case with a
However as is seen from the Case 5, 6, and 7 in the sensitivity analysis, there is
also a possibility of restructuring the IT Staff. Hiring more Level 1 (entry level) IT Staff
and lowering the number of Level 2 and Level 3 IT Staff can significantly affect the
costs. This can be reasoned out by the fact that Mac OS X being heavily based on UNIX
and being highly user-friendly, does not require a large number of experienced IT Staff,
with certifications to manage them. The same can be handled by a higher number of
experienced staff.
Conclusion:
Although the initial investments based on the hardware costs can be a cause of
concern to a several small / mid-sized organizations, the software costs and the licensing
costs that are imposed by the Microsoft solution can negate the heavy initial investment
on the hardware. Adding on the high reliability of Apple hardware and software, which
can reduce the maintenance costs drastically, Apple solution for enterprises seems to be a
highly cost-effective deployment. The user friendliness and the UNIX platform on which
Mac is built, makes it easier to reduce experienced IT staff that are required to maintain
and manage it. In the long run, these attributes can prove cost effective. Over a period of
three years that has been considered here, Apple solution seems to outrun Dell-Microsoft
The higher hardware costs of Apple have always been a hindrance in its efforts to enter
the enterprise market, when organizations were skeptical about its real ability to prove
cost beneficial. However through the release of Mac OS X Server (Leopard) and its
unlimited licensing scheme, Apple has been successful in offering competitive pricing to
There are several hitches that still stand in Apple’s way to being successful in the
enterprise sector. The dominance of Microsoft and its Windows operating systems has
been such that, a complete migration from a Windows solution to Apple may not be as
cost effective. Hence the real niche that Apple can target is the mid-sized and startups and
From a technical perspective too, Apple still needs to cross several hurdles. With
concepts of virtualization spreading like an epidemic through the enterprise sectors, the
fact that there is no complete virtualization solution on Apple can be a cause for concern.
Also, the directory services through Open Directory, that Apple claims to be a
replacement for Microsoft’s Active Directory, is yet to prove its capabilities of being
scalable across a large organization. Although there are cases of small deployments,
within large organizations where Open Directory has seamlessly integrated with Active
Directory, this can be a cause for further worry. For starters, however, I would
Being a Mac enthusiast myself, and through an unbiased cost model analysis that
I have attempted to build in this project, I foresee a shift in the IT enterprise, that has for
4. “Mac vs. PC: The truth About TCO” – James Maguire, 11/22/2003,
http://www.newsfactor.com/story.xhtml?story_id=22738&page=1
http://www.computerworld.com/action/article.do?command=viewArticleBasic&a
rticleId=9043839
7. “The TCO of Operating Systems: Compare the Big OSes” – CIO, 08/02/2007,
http://www.cio.com/article/127552
http://www.networkworld.com/best/2006/022706bestbreaker-
schwartau.html?page=1
9. “Total Cost of Ownership for Linux in the Enterprise”, Robert Frances Group,
07/22/2002, http://www-03.ibm.com/linux/RFG-LinuxTCO-vFINAL-Jul2002.pdf
http://apple.slashdot.org/article.pl?sid=04/01/21/1959244&tid=179
• Accessory kit
• AirPort Extreme
• 8GB (4 x 2GB)
• 3U 16-bay chassis with dual redundant power supplies and cooling modules
• Dual active/active RAID controllers with two 4Gb SFP Fibre Channel ports, 2GB
DDR ECC RAID cache, SAS expansion port, gigabit Ethernet, and serial
management port
• Rack mounting hardware for standard 4-post rack and 2-post telco rack
Philippines, Thailand)
Core
• Standard Touchpad
• 2* 1TB 7.2K RPM Universal SATA 3Gbps 3.5-in Cabled Hard Drive
• No Operating System
• 750GB 7.2K RPM Universal SATA 3Gbps 3.5-in HotPlug Hard Drive
• 3000VA UPS 120 Volt, Battery Backup & Protection ,2U Rack Mount
• Four SAS 5/E HBAs, PCI-Express, 2X4 Connectors (requires 4 SAS cables)