Even then they realized it was a losing battle. Apple is an Apple shop and even they couldn't use their own gear at scale. I'm sure when the Xserve team saw racks and racks and racks of generic kit in Apple's own datacentres they realized they weren't going to win.

You're right that the Mini is a very capable workgroup server, and providers like http://macminicolo.net/ are hosting Mac "servers" by the thousands, so it's not like they've completely given up. Intel's the only other player in this space with their NUC machines and those tend to cost as much or more.

Hopefully they'll kit out the Mini better in the 2018 iterations. That 2012 quad-code i7 variant was an exceptional unit.