They were afraid that x86 hardware would eclipse SPARC hardware, so development of Solaris x86 lagged behind "real" Solaris, and the HCL was always very small. They wanted to sell you expensive hardware, not a software license.
What actually happened was that x86 hardware eclipsed SPARC hardware... And organisations that would have been happy to refresh the hardware and keep the same OS and just recompile their apps found that they couldn't, so they jumped to Linux instead... And the rest, along with Sun itself, is history. I was working for a big Sun customer during this transition, we begged them to make Solaris x86 a first-class citizen, and we had a lot of support within Sun too but the SPARC Mafia won the day and with regret, our next big order was (IIRC) with Dell and SUSE...
What actually happened was that x86 hardware eclipsed SPARC hardware... And organisations that would have been happy to refresh the hardware and keep the same OS and just recompile their apps found that they couldn't, so they jumped to Linux instead... And the rest, along with Sun itself, is history. I was working for a big Sun customer during this transition, we begged them to make Solaris x86 a first-class citizen, and we had a lot of support within Sun too but the SPARC Mafia won the day and with regret, our next big order was (IIRC) with Dell and SUSE...