The Xserve had Intel Xeon versions, not sure why the termination of that line would have anything to to do with the intel transition, since they got deprecated three years after the transition was complete.
IIRC one problem was that MacOS was not competitive. I recall some benchmarks of applications like MySQL, comparing MacOS Server to Linux on similar or even identical hardware, with results that could only be described as abysmal on MacOS Server.
