They fill a niche, and so did Xserve. It had an accompanying software suite that was fully fleshed out to an Apple user's likings.
The biggest gap right now (afaik) is Apple's virtualization limits. Regardless of the cores in your system, any Mac can host no more than 2 instances of MacOS. It's a huge kneecap to how Macs can be used as a server, and a death-blow to any serious hosting company that wants to provision them as a virtual resource.
> I would think the performance per watt would be very competitive with other server vendors on the market as well.
I can go get a 4 core Ampere ARM instance for free. The market goes so much cheaper than Apple's CPUs it's not even funny. Performance-wise, Apple kinda got their lunch ate by Nvidia's Grace server. There isn't really a demand to fill for high-performance ARM computing, and the cheap end goes so cheap that Apple can't even touch them.
I see two ways for Apple to escape this:
1. They can double-down on their ecosystem investments to create a "CUDA-killer" and accompanying hardware, spending tens-of-billions of dollars across multiple years to obsolete Nvidia's industry ties.
2. Initiate or join an Open Source pact to write a CUDA replacement or translator a-la Vulkan/DXVK that gives vendors no choice but to abandon Nvidia.
Of course, the easier play is to just pretend all of this is beneath you and continue building your current ecosystem. It's what I would do, and I don't see a rational reason why Tim Cook would read your pitch and greenlight a project like that.