- Cancelling -if briefly- Solaris on x86 in 2002. This killed Solaris in the minds of many who didn't want to be locked into Sun for SPARC.
- Failing to make a deal with Google in 2002. Apparently Sun insisted on knowing how many servers Google had, something that Google considered a high-value secret, so Sun failed to make a deal with Google, so Google ended up using Linux and contributing to Linux. This was a tremendous mind-share disaster -- it's hard to overestimate the damage done by this.
- Closing Sun PS (professional services). Bad bad move, possibly the worst of them.
- Not giving up on J2ME earlier -- it's not the sort of thing that could last forever, and Steve Jobs killed it with the iPhone. This was a case of vendor lock-in clouding Sun's decision making.
- Failure to recognize that Sun needed to become a systems company, not a CPU company.
- Failure to respond to Active Directory. This was yet another case of vendor lock-in clouding Sun's decision making: the Sun DS product team was milking their existing customers more than they wanted to go after more business with a sustainable strategy.
- UltraSPARC was more than a decade too late to make up for SPARC falling way behind x86_64. Sun needed to give up on SPARC, but again, vendor lock-in sounds sweet but turns out to be poison.
- Failure to make a deal with Apple for it to use ZFS in OS X.
- The MySQL purchase. WTF, this was horrible and stupid. The only interesting effect of this was to make Sun a target of acquisition for Oracle. But of course, it turns out that Oracle -a company built on building mind-share- had become too blinded by vendor lock-in just like Sun, so...
There were numerous other mistakes along the way. These are the most salient, for me anyway.
What's shocking is how long it took Sun to fail under those circumstances!
Also shocking is how much amazing stuff came out of Solaris engineering and the systems division!