If Sun were actually to open-source (that's a verb now, is it?) Java as IBM demands, IBM would finally own it. They've got more resources and they'd throw them at the problem, easily taking away the leadership in the Java space. Sun would just be sitting there, watching in disbelief what happens to what used to be their stuff. That's really what IBM wants and I am amazed how clever they are about it.
So, let's assume Sun would fall for it. Then there would be a core Java environment that's open-source and the J2EE (the stuff that really matters) implementations would still be closed? How much would that be worth? So the next logical call is to say "let's open up all those J2EE app servers and related infrastructures, too." And there we have IBM making WebSphere a freebie they throw into projects (isn't that done, anyways?) and killing off most of the software revenue models of their competition while happily buzzing along with their huge global services operation and their server hardware business.
Of course that's just an evil conspiracy theory.