I think "sold out" is way too harsh. I suspect ' more like they got tired of waiting for something that went from "doesn't look like it's going to happen" (but probably realized only after they'd put a fair amount of work into it) into "it will be a cold day in hell...".

Sun demanded a mobile usage restriction. Oracle is suing a company that for technical and no doubt monetary reasons went around this restriction. Oracle now can't make up with Apache without undercutting their lawsuit, even if they were so inclined, which strikes me as unlikely.

Half (or more?) of Apache's contributors are IBM employees. For example: http://harmony.apache.org/contributors.html