In a move akin to the Peace of Westphalia that brought an end to that nasty little European episode known as the Thirty Years War, Sun and Intel this week formally ceased hostilities.

Laying religious differences aside like the Protestants and Catholics in 1648, Sun is going to sell Intel-based Xeon workstations and servers - presumably because it can make a buck selling Intel-based workstations and servers - presumably because Intel is making better server chips right this minute than AMD and customers want them.

Intel in turn is going to promote Sun's Solaris operating system as a mainstream OS and the Unix operating system for Xeon systems and distribute the thing as the opportunity arises - presumably because Sun continues to cling to the notion that it can still get back in the race and indulging it is the price of selling chips to Sun.

And Intel needs to sell all the chips it can to keep AMD at bay and its gross margin up although it's unclear how much business it will actually see from Sun, the fourth-largest server maker after Dell, HP and IBM. Sun, on the other hand, described Intel as more mainstream than AMD.

One can only assume that this landmark détente will eventually lead Sun, which can't keep developing its Sparc chip indefinitely, to eventually replace it - and if they can't get it out the Xeon maybe they'll even adopt Intel's high-end Itanium chip.

As part of the alliance there's supposed to be joint engineering and design and- note - thinking about Sparc - the pair is supposed to collaborate on the issue of greater-than-four-processor scale-up systems (eight and above) optimized for Solaris. Apparently Sun's "under-leveraged" Sparc engineers are going to be put on the case.

Anyway, more immediately, Sun is expecting Intel, with its vast reach, to provide expanded volume opportunities and new accounts for Solaris as well as for Java and its NetBeans IDE and is counting on its help in optimizing Solaris applications on Xeon and expanding the application portfolio for Solaris.

Intel, we are reminded, has considerable software skills that Sun apparently hopes to exploit and Sun, as of last week, is on a tear to pitch Solaris to start-ups instead of Linux.

Meanwhile, Sun's new family of one-, two-, four-processor servers, telecom-specific servers and workstations running Solaris, Windows and Linux is supposed to come out late this half. Naturally Sun will continue to supply AMD boxes. Before Dell, Sun was one of AMD's largest Opteron account but AMD is in a bad karma right now so it stands to reason that it would lose its Sun exclusive.

Word of the Sun-Intel rapprochement came the day before AMD posted its painful Q4 results.

According to Sun CEO Jonathan Schwartz it took six months and a really good bottle of Barolo to clinch the "market-changing" deal. Both companies are making a comeback after having their faces in the dirt - Sun of course far worse than Intel - and Jonathan mumbled something about momentum breeding momentum.

Jonathan and Intel CEO Paul Otellini seem at ease with one another, something that probably could never be said about former Sun CEO Scott McNealy who dubbed the Itanium the "Itanic."

Apparently Intel figures Solaris will show off the virtualization, I/O acceleration and demand-based switching skills in its chips. It will also get Intel into places it isn't dominant.

Wall Street estimates put the loss to AMD somewhere between $25 million and $75 million.