So now what?
Continuing to do what doesn't work is traditional, but absurd - so it's time to reach for sensible alternatives like taking the company private. One option? a lightly leveraged employee buyout taking advantage of both the available cash and the company's low share price.
And after that? My guess is that McNealy's single arrow strategy would make the most sense.
That means divesting the x86 business without giving up the customer base - and, on the positive side, a new public company spin-off can both facilitate the buyout and provide the legal lubricants needed for significant organizational (i.e. staffing) change.
In the alternative, there's certainly room to talk about off-loading x86 retailing and support to any of the big three: HP still has some die hard Unix customers it doesn't want to support; Dell is increasingly desperate for a market differentiator against both HP and Acer; and IBM has a Lenova problem.
The new company would put all of its wood behind the coolthreads products and their successors - and I do mean all of the wood. It's increasingly obvious that open source is on a run away adoption curve and will ultimately relegate companies relying on software licensing revenues to history's scrap heap. Sun is well along that road now, and could jump further ahead: develop a strategy based on selling only hardware and operational support with no separate consulting, no separate software licensing, and no mixed messages for customers.
Basically: the strategy would be to charge a premium price for a premium product and differentiate on operational stability.
Build on the Fujitsu relationship, stay the course with the big data center customers, but focus a lot more effort in the small to mid range market: the people who desperately want stuff that "just works" and now think they have nowhere to go.
These people are angry about IT, about something that looks so simple but costs them money and aggravation every single day of the week -and no one's telling them that Sun has exactly what they need. Bundle open source applications with preconfigured hardware, provide personalized sales and real operational support, add legal protections, push Sun Ray, and these guys will stampede to Sun.
And that, particularly for the people who work at Sun, is really where the silver lining is for today's market behavior.