Each core in those chips was seriously underclocked compared to a Xeon of similar vintage and price point (1-1.67 GHz; compared to 1.6 GHz to 3 or more), and lacked features like out-of-order execution and big caches that are almost minimum requirements for a modern server CPU. Sun hoped to make up for the slow cores in server applications with having more cores and having multiple threads per core (though with a simpler technology than SMT/hyper-threading).
However, Oracle eventually decided to focus on single-threaded performance with its more recent chips - it turns out that no OoO and < 2 GHz nominal speeds look pretty bad for many server applications. My suspicion is that even though the CPU-bound parts of games are becoming more multi-threaded, AMD will be forced to fix its slower architecture or lose out to Intel again in the server AND high-end desktop markets in a few years.