Sun launched a line of servers using AMD chips in late 2003, but it expects AMD and Intel to "leapfrog each other" with improvements in their processors and price advantages, said Bill Vass, president and chief operating officer of Sun Microsystems Federal Inc., Sun's government-focused business. Sun's goal is to provide government and other customers with a complete package of software that runs on multiple architectures, Vass said, stressing that Sun's message to customers will be to use the right architecture for the right job.

By releasing Solaris and other software under open-source licenses and by embracing open standards, Sun hopes government customers will see how they can avoid vendor lock-in, McNealy said. He went on to ask the attendees what they would like to see Sun do differently. One audience member said Sun needs to help its customers look at migration strategies to Solaris and other open-source software, "beyond just putting a stake in the ground."

"You're right," McNealy answered. "We can't say, 'Don't do the wrong thing.' We've got to help people where they are today."

McNealy stepped down last April, but said he has frequent contact with his successor, CEO Jonathan Schwartz -- exchanging a dozen e-mails each day and meeting once a week. McNealy said that while he may give Schwartz lots of advice, "one of the reasons Jonathan got the job is because he ignores a lot of it."

Grant Gross of the IDG News Service contributed to this report.