Sun is to shed between 5,000 and 6,000 jobs, the company announced on Friday.
The workforce reduction is intended to create cost savings of $700m to $800m (£471m to £539m) annually, Sun said in a statement, but these are only predicted to come into effect in the third quarter of Sun's 2009 fiscal year, between January and the end of March next year. The company expects to incur costs in the range of $500m to $600m over the next 12 months as a result of its plans.
The reduction of between 15 and 18 percent of the workforce is also intended "to align [Sun's] cost model with the global economic climate", the company said.
In addition, Sun announced that it would restructure its software business to form three groups: Application Platform Software, Systems Platforms and Cloud Computing & Developer Platforms.
The company also said that Rich Green, Sun's executive vice president of software, has resigned. Sun said that Green had been "an instrumental force in evolving Sun's software strategy and successful business execution".
The new Cloud Computing & Developer Platforms group will build on Sun's existing online developer community, and will be led by senior vice president Dave Douglas. The group will try to capitalise on the trend towards online software, Sun said in a statement.
The Application Platform Software group will be in charge of Sun's Java technology franchise, MySQL open-source database products, and software infrastructure business, including the GlassFish application server and identity-management products. Sun's existing Learning Services organisation will be folded into the group, which will be headed by Sun executive vice president Anil Gadre.
The Systems Platforms group will include Sun's Solaris, Virtualization (including xVM and VirtualBox) and Systems Management Software teams. The 7000 series of open storage products, ZFS technology, DTrace analytics, and storage engineering will become part of the Systems Platforms roadmap. The group will be headed by Sun executive vice president John Fowler.
Sun chief executive Jonathan Schwartz said: "Today, we have taken decisive actions to align Sun's business with global economic realities and accelerate our delivery of key open-source platform innovations — from MySQL to Sun's latest Open Storage offerings."
In October, Sun reported a seven percent drop in first-quarter revenue.