I'm a little in the realm of speculation here. Part of the issue with Java for embedded devices was "a bad fit". What made Java thrive in the server or even applet spaces wasn't the instruction set but the rich ecosystem around Java. Yet, threading - as "inherent" to Java it is - is provided by the OS and "only" used/wrapped by the JVM. All the libraries ... megabytes of (useful) software, yet not implemented (nor even helped) by hardware acceleration. The "equivalent" of static linking to minimize the footprint never quite existed.

So on a smartcard ... write software in a (uncommon, and when compared with ARM which is a very "rich" assembly language) form of low-level instruction set, and pay both Sun and ARM top$ for the privilege - nevermind the likely "runtime" footprint far exceeding the 256kB RAM you planned for that 5$ card - why? Writing small singlethreaded software in anything that compiles down to a static ARM binary has been easy and quick enough that going off the ARM instruction set looked pointless for most. And learning which parts of "Java" actually worked in such an environment was hard, even (or especially?) for developers who knew (the strengths of) Java well. Because developers and specifiers expected "rich Java", and couldn't care less about the Bytecode. JITs later only hoovered up the ashes.