But the company itself wasn't preconfigured for such a sharp downturn -- a message that Schwartz is sending with the internal restructuring announced today. In addition to the planned layoffs, Sun shook up its software organization, creating two new business groups -- one focused on application platform software, the other on and developer technologies. Sun also folded its systems platform software products, including Solaris and its virtualization tools, into its systems group.

Schwartz said in a statement that the software realignment was designed to "accelerate our delivery of key open-source platform innovations." Sun's announcement added that the new organizational structure "is a recognition of the comprehensive role software plays in the company's growth strategy." And it said that as part of the changes, Rich Green, who was Sun's executive vice president of software, "has chosen to leave the company."

Jean Bozman, an analyst at market research firm IDC, said that Schwartz has intended for Sun to be the category leader in open source for enterprise users. Sun officials hope to make money off of open-source technologies through technical support contracts and by selling hardware to users, Bozman said. But, she added, "clearly they weren't feeling that they were getting the maximum leverage they could" from the open-source products.

One of the risks for Sun is how the job cuts will affect its financial performance and its ability to service customers. The company had 34,900 employees as of the end of its last fiscal year in June. The new layoffs will eliminate between 5,000 and 6,000 workers over the next 12 months; combined with earlier cutbacks, that will leave Sun with 27,000 to 28,000 employees, for a head count reduction of as much as 21% since mid-2007.

Sun hopes that the layoffs will save up to $800 million in expenses annually. But when a company cuts this many people, "if it's not done properly, the effects on the company could be deleterious -- awful," King said.