Updated from Dec. 23

Sun ( SUNW) has won an early symbolic victory in its antitrust suit against Microsoft ( MSFT), with a federal judge saying Microsoft must install Sun's Java programming language in its operating system. While Sun employees crowed, onlookers sounded decidedly skeptical about how much benefit Sun will wring from the order.

Though the stock saw an initial pop on the news -- shares opened at $3.34 this morning, up 13% from last night's close of $2.96 -- the market later lost some of its enthusiasm. By late morning, Sun had drifted down to $3.17, a premium of 7% over yesterday.

The latest ruling relates to Sun's charge that Microsoft hurt Java's ability to compete with its own .Net software by offering only an outdated version in its Windows operating system. It's part of an antitrust suit filed by Sun in March against Microsoft.

Yesterday a Microsoft spokesperson said the company is "disappointed" with the order and plans to appeal the injunction.

But in a note out today, UBS Warburg analyst Don Young wrote that the court's decision isn't really material to either Sun or Microsoft. "Java is easily downloadable off the Web for developers who are interested in the programming language," he pointed out. UBS Warburg has done banking for Microsoft.

At Lazard Freres, Luke Fichthorn was only marginally more positive. "This unusually strong measure bodes well for Sun's ongoing antitrust lawsuit against Microsoft," he said in a note. But financially it won't make much difference, he added. "The inclusion of Java on Windows makes the Sun ONE development platform much more viable, but developer tools are not financially significant, in our opinion. Sun still has work to do in monetizing its software assets beyond Solaris." Lazard Freres offers banking advice to Sun.

In a conference call after the ruling yesterday, Sun's Rich Green, a vice president and the general manager of Java, said, "The focus here was really on setting straight what had been done by Microsoft repeatedly, time and time again." He complained Microsoft had been shipping a version of Java that is five to six years old. "It's not compatible; it's missing many of the features now relevant in the end-to-end market," he said.

Indeed, the judge hearing the case recently compared Microsoft's behavior toward Sun to Tonya Harding's kneecapping of fellow skater Nancy Kerrigan.

Green said the ruling will allow for the distribution of a much-improved version of Java. "The current version is rich in services functionality. It's far beyond anything Microsoft's talking about .Net," he said. "What this ruling means is developers writing to Java deploying on Sun's high-performance platforms will associate its success with Sun's complete product line."

But Sun followers expressed doubt about how much practical value the ruling will have. "I think there's a pretty good chance it's going to be too little, too late for Sun," says Bill Whyman, president of the Precursor Group, a Washington, D.C.-based research group on tech and telecom. "Microsoft is now poised to enter the enterprise market with a whole suite of .Net servers. It would take a dramatic and substantially improved stronger remedy to slow Microsoft's move into the enterprise."

Though the ruling has some long-term strategic value, he adds, "At the end of the day, Sun is in the hardware business, and this really helps, in the short term, the people who sell Java software like BEA, IBM ( IBM) and Oracle ( ORCL). Sun makes very little money selling Java-enabled software; IBM and BEA make billions. And having all PCs able to read and execute Java helps their business more immediately."

From the standpoint of Sun, First Albany's Walter Winnitzki called the ruling "an important religious battle, but probably not something that's going to impact the near-term momentum of the company," which he noted "has not been good."

The bottom line: Although Sun has scored a sweet legal victory, it has yet to find a way to turn Java technology into significant profit. "It's something of a Pyrrhic victory. Sun's real challenge is to find a business model for Java that works," said one investment banker who has followed the company for some time.

Today's order is only a preliminary injunction, however. It's not clear whether Microsoft will be able to stay the latest ruling or whether it could be reversed following a full trial, which is expected to take place within two years.