So they lose revenues in the normal part of Sun because those customers now pickup their SW for nothing essentially, and instead of Sun then laying off employees, they are shifted into services. One area goes down, another goes up.
Hardware at Sun then becomes less focused on manufacturing, and more about building a community of external implementors by providing good HW designs and support.
I'm thinking theoretically.
The same people that might make great software producers might be lousy at services, so it's entirely possible that large layoffs would still happen, which would hurt morale. Indeed, 'services' is a different industry, and it's not like you can just pick up from one day to the next and become a services company. IBM managed to do that, so maybe they would be a good fit, but it's not an easy thing to accomplish in any case.
The idea was that Sun becomes a designer of and licensor of state-of-the-art HW designs (which it may or may not implement). The designs come with software APIs too that different companies may want to implement.
The difficulty is that SPARC International is already a different organization to Sun. So, I don't know if they could've done this legally.
A second, interesting way, would be if Sun decided to make inexpensive SPARC desktops based on their T1 or T2 designs that encourage people to develop massively multi-threaded applications that run best in spaces where x86 boxes can't go just yet (and won't go until at least Larrabee). But they need to run and build something sexy like a Mac mini and they need it by last year or so. I doubt they could pull this one off.
As for me, I am going to stockpile Sun type 6 USB keyboards and matching mice, just to ensure my ability to have a keyboard with keys labeled Help, Stop, Again...
I was saying this in 2002.
Only the most adaptable survive.