Wired on Friday: There have been many reactions to the peace settlement between Sun and Microsoft announced last week.

Not the least of them occurred within Sun's ranks: a day after the $2 billion settlement between the companies was revealed to the press, Rich Green, Sun's vice-president and prominent Java advocate, resigned.

It's hard to tell in the flurry of claims and counter-claims whether Green was happy about the deal. Some say he left in disgust. Others say he was a key figure in cementing the accord. But it's hard to believe that morale is great at the workstation giant right now. Everybody in the Valley feels it.

No company - not even Apple - is more closely aligned with the culture of Silicon Valley than Sun. The company was created in 1982 by Stanford students eager to take their research ideas to the marketplace (Sun originally stood for "Stanford University Network").

Sun's operating system, Solaris, is a direct descendant from the original, hackish Unix, favourite of the Valley. The original founders look like a gallery of Valley stereotypes. Bill Joy, the gaunt, all-night hacker; John Gilmore, the political activist, mind-altering drug advocate and founder of the Electronic Freedom Foundation; Scott McNealy, ultra-libertarian, loud-mouthed, consciously controversial entrepreneur.

That alignment has proved beneficial for Sun. The Silicon Valley rebel stock that Sun drew from has been, for most of the last decade, proven correct. While Microsoft and others were struggling to come to terms with the new open protocols and standards of the Web, Sun was cosy with the research labs and innovators who had invented it.

Sun's motto was "The Network is the Computer" long before anyone appreciated how powerful a network could be - or what it would be like when you linked them all to form one giant Internet.

But such an environment comes with its own problems. One of the hardest parts of working within Silicon Valley culture is keeping your organisation together. Anti-social brilliance, brash self-confidence and a sense of defiance are all valued commodities here. Loyalty is not. Sun's founding fathers abandoned PhDs and academic careers to form the company. Sun employees, in turn, are always being drawn away to form start-ups of their own.

So how do you keep your brightest minds from jumping ship? Scott McNealy's approach, as CEO, has been to create a fierce sense of pride in Sun's work, while continually bashing the technology of competitors.

Most Microsoft competitors combine a fierce criticism of Microsoft's business strategy with a grudging respect for its technological accomplishments. For McNealy and Sun, it was the other way around.

McNealy's pronouncements showed a libertarian distaste for government intervention in the market - even intervention that would hold back Microsoft's monopoly. State prosecutors privately bemoaned the reluctance of companies such as Sun to provide evidence in the Microsoft anti-trust cases.

McNealy was happy, however, to attack Microsoft software. "A giant hairball" was how he described Windows NT when it first appeared. He used dismissive nicknames for all of Microsoft's products: "Look out!" for Outlook, "Windows More Errors" for Windows ME.

McNealy was outspoken - but his sentiments were reflected throughout Sun. I remember talking to a Sun developer who sincerely argued that the company was on more or less a mission from God to save the world from buggy Microsoft products. McNealy called Microsoft "the Dark Empire".

So when Sun decided to take a private lawsuit against Microsoft in 1997, claiming "trademark infringement, false advertising, breach of contract, unfair competition, interference with prospective economic advantage, and inducing breach of contract", it seemed like some final, apocalyptic confrontation.

The issue was expressed in contractual terms, but underlying it was a technical complaint. Microsoft's implementation of Java, licenced from Sun, was slowly veering off into a Microsoft-tweaked version all its own. Sun was terrified that Microsoft would pull its standard strategy of "embrace and extend" - where it would adopt an existing industry standard then add Microsoft-specific extensions until the standard was effectively Microsoft's to own.

Since then, McNealy's approach to Microsoft has morphed. His suggested solutions to the Microsoft monopoly stepped away from the market and hovered around government restrictions on its intellectual property. He proposed that Microsoft be forbidden from buying up other company's intellectual property.

Well, these days the apocalypse is over. Last year, McNealy called Microsoft chief executive Steve Ballmer and asked him out for game of golf. Good and Evil played a couple of rounds and came to an agreement. They would settle. Microsoft would pay the now struggling Sun $2 billion; both would commit to inter- operability between their systems. Part of the agreement - $900 million - involved resolving patent issues. Microsoft has not bought up Sun's intellectual property but it is surely going to be less threatened by it.

And what are Sun's employees to do now they're not at war with the enemy? There's certainly some demobilisation in the works. McNealy seemed quiet and understated in last week's press conference, while Ballmer was his usual bombastic self.

Sun's publicists have struggled to make the deal sound an even bargain between the two companies but Microsoft hardly acknowledges the deal's existence.

And how does my dedicated Sun employee feel about all this? Hard to say. He no longer works there.