The smart move is for Microsoft to adopt Java while it must, and attempt to own the language over time. There are several opportunities for the company to do so. While Microsoft's Internet Explorer runs Java applets, it does so by wrapping them and executing them as ActiveX components. Microsoft extensions, modifications, and options to either the language or virtual machine may permit it to create the de facto standard for both. If Sun can continue to define the language and virtual machine, it cannot hope to match Microsoft in supplying a set of integral class libraries, APIs, and other interfaces that a majority of developers will use.
Technology is no match for market share as a defining force in the software market.
If Microsoft ends up owning Java, watch out. It will maintain an option of continuing to own it, or enhancing it to death. In an attempt to rapidly codify a standard definition of both the language and virtual machine, Sun has been quick to drop Java into silicon. Java on a chip is a great opportunity for Sun to sell microprocessors and computer hardware, as well as a good idea for the market overall. However, even in the Java world, Sun is a third-tier chip vendor.