An Xserve Lift, an iTunes Shift and a Gift Card Grift

04/10/09 4:00 AM PT

The run-up to June will no doubt be awash with iPhone rumor and speculation. For now, though, there's plenty of other action going on in the world of Apple to keep things interesting. This week, IT types got to pick through Apple's new servers, music fans got to pay less -- or sometimes more -- for a fix, and flimflammers may be trying to lure app developers into a scheme to wring cash from cracked iTunes gift cards.

Most of Apple's (Nasdaq: AAPL) core products have seen some sort of refresh since last September, and it appears there aren't a whole lot left to update any time soon.

Most recently, Apple unleashed Intel's (Nasdaq: INTC) Nehalem processors in its Xserve server line, which doubled the performance ... so, that's cool, but definitely cool for a limited audience of professional business users. In a more consumer-oriented vein, the next-generation iPhone won't blow anyone away until probably June or so, and the Apple TV has been mostly ignored -- only Apple knows what kind of product timeline it's on.

In the mean time, the Apple-focused blogosphere will likely spend the next two months looking under rocks and peering into crannies to pass the time. Oh, and there will be rumors, lots of rumors (but we'll cover those another day).

The Xserve Factor

As for the Xserve, Apple slipped in Intel's Nehalem Xeon processors and a next-generation system architecture. The 1U rack-optimized Xserve now delivers up to an 89 percent improvement in performance per watt, Apple boasts. The Xserve is available with up to two 2.93 GHz Intel Xeon processors, as well as an option to include a 128 GB low-power solid state drive (SSD) and up to 3 TB of internal storage. It starts at US$2,999, but it also includes an unlimited client license for Mac OS X Server version 10.5 Leopard.

Each processor contains an integrated memory controller with three channels of 1066 MHz DDR3 ECC memory, which Apple says delivers up to 2.4 times the memory bandwidth while cutting memory latency up to 40 percent.

On the surface, the 128 GB SSD drive seems a bit small -- until you realize that it's designed as a boot drive to run the system.

"I think the SSD makes quite a bit of sense. It doesn't eat a drive-bay and it has ultra-fast seek-times. There are quite a bit of uses for SSD in server-use IMO," commented Evangelion on the MacRumors.com post on the subject.

The RAID add-on price, however, seemed to irritate a few. "Still crappy that in a server they charge you $700 to have RAID capability (hello! it's a server!). At least it brings SAS with it though," added edesignuk. "Can't help but think if you pick up an HP (NYSE: HPQ) Proliant DL you'll get all this and more as standard."

Perhaps. "Was looking in to this for both HP and Dell (Nasdaq: DELL) , Apple are quite competitive, when most Windows servers come without things like operating systems and hard drives! Devil's in the detail as they say ...," added Schizoid.

"Especially as you get an unlimited client version of OS X Server for it. Try buying an unlimited client version of Windows Server (I know you can't) and see how much that costs you ...," chimed in Cromulent.

The upgrades Apple gave Xserve were well-timed for Mel Beckman, an independent network and Internet security consultant, who received a pleasant surprise.

"I ordered one about three weeks ago, not knowing Apple had new ones coming," he told MacNewsWorld.

"It hadn't shipped yet, and Apple called me today and said, as a result we're going to give you a free upgrade. And the new model, with all the upgrades I had configured, will still cost me about $1,500 less than originally planned," he said.

So, sometimes Apple's pricing models actually drop.

Variable Pricing Comes to iTunes

Then again, sometimes prices go up. Apple's one-price-fits-all model for iTunes songs, which had been tweaked and battered a time or two in the past, will now break into at least three pricing tiers -- $0.69 for older and less popular tracks, $0.99 for the bulk of the catalog, and $1.29 for premium popular songs. Naturally, music labels will likely work with Apple and other online outlets for special promotions.

"The labels are now scrambling to find ways to cash in on their most popular offerings. One approach has been a concept called iTunes Pass. Similar to an iTunes Season Pass for TV shows, the digital offering combines upcoming album releases with exclusive singles, videos, and other media that will be made available to subscribes over the period of several weeks or months for a premium price," noted AppleInsider.com.

For example, for $16.99 you can buy an iTunes Pass to The Fray, which gives you new music and special bonus content, namely the group's "Live from Soho" session, a video performance, and some additional audio and video live performances. There's a "grayed-out" song listed as well, which will be delivered at some unknown point in the future.

Many of the comments expressed disappointment in higher-priced songs, and some even blamed Apple for it -- though it may not really be Apple's fault, according to Mike McGuire, a vice-president of media research for Gartner (NYSE: IT) .

"If you look at the stuff they announced months ago, when they first brought up the changes of the tiered pricing discussion, notice the careful wording -- the prices are set based on what Apple pays the labels -- basically the wholesale price," McGuire told MacNewsWorld.

Apple didn't exactly cave to the music labels, according to McGuire -- remember, the new tracks are DRM-free. Its attitude, he explained, was more along the lines of, "'OK, guys, you've been wanting this for years, and if this is what you really want to do, go for it.'

"Apple made great pains to tell me that price changes would only happen once a week," he added. Rapid price changes could easily turn into a PR nightmare.

"What's going to be interesting is to see how consumers react to $0.99 versus $1.29," McGuire said.

"I believe the .99$ was psychologically much smaller price than it really was. I bought some songs just because I liked them and never thought about the price. Yes I noticed the 5$, 10$ invoice, but when I bought the song I didn't care," commented gabriel_bl on the AppleInsider.com post. "Now when I hear some song and I like it, from the same CD I usually buy 2-3 songs that could end up to be nearly 4$. I will question my decision and think if it is not better to buy a whole CD somewhere for 9$ and I will wait and look for a deal. While the time goes by and the radios play the same songs I will hear the song enough time to not want to buy it anymore.

"There will be less spontaneous shoppers," gabriel_bl noted.

Meanwhile, the Hackers Are Cracking Apple's Codes

While Apple is still trying to sell music, hackers have found a way to crack Apple iTunes Gift Card codes, which basically means someone can use the code to "buy" (steal, really) music, media and apps from iTunes.

As of now, that means Apple is the one losing out. However, the real profit for the hackers is a bit hard to visualize. They either get free media (no big deal there -- they could get the same stuff much more easily through file-sharing) or they have to sell a cracked code to someone who wants to buy media (who could also use file-sharing). The line to cold hard cash isn't very direct.

Enter the App Store developers. Some iTunes gift code crackers, according to Ars Technica, are attempting to wrangle iPhone app developers into a kickback scam to generate more money from the cracked codes by driving up sales of apps in exchange for 50 percent of the developer's cut. Basically, the hackers/crackers use bogus codes to buy a bunch of a cooperating dev's apps, Apple cuts the developer a check, and the developer then gives the hacker a cut.

"Hopefully no devs will even reply to those emails. It's fencing of stolen goods and money laundering (because taxes are being evaded). Those aren't things you want to be involved in by ANY means," commented mabhatter on the ArsTechnica.com post.