As per Apple’s web site (http://www.apple.com/xserve/), the iPhone maker will stop selling its rack-mount Xserve server line after January 31, 2011. In a statement on its web site, Apple said that it was transitioning away from Xserve. And was offering two solutions to choose from. Mac Pro with snow leopard server OS and Mac mini with snow leopard server OS.

Apple’s 1U rack-mount Xserve devices were introduced in 2002 as complement to the company’s UNIX based Mac OS X server operating system. “Xserve is the result of listening to our customers,” Apple CEO Steve Jobs said in a press release statement in May 2002 when the product was first released. However, Apple entered the server business in 1996.

Although, initially the product featured one or two PowerPC G4 processors, it was later switched over to the new PowerPC G5, and now runs on two quad-core microprocessors. The Xserve can be used for a variety of applications, including file server, web server and high performance computing.

However, over the years sales of Xserve products have been disappointing. So it does not come as a surprise to market watchers. In fact, as it plans to cease sales of Xserve servers, it intends to promote sale of Mac Pro and Mac mini desktops with Mac OS X Server software pre-installed as alternative.

Using Intel’s newest Xeon processors, Mac Pro Towers, however, surpass the Xserve in processor performance and offer a desktop format to make it attractive for data center applications, said Apple.