More like early, then late...
Sun was one of the first Unix vendors to approach virtualization at all, mainly based on the E10k, domains, and early versions of Solaris Resource Manager in the mid-late 90's. These efforts sold a lot of hardware, but weren't sophisticated enough to allow most customers to really get much benefit.
These initiatives lost steam in the early 2000's, as Sun had bigger problems on their mind. The also attacked the Unix virtualization market with o/s virtualization (containers) rather than with a hypervisor. IBM decided to go with the hypervisor approach first and, along with the addition of a lot of other feature/functionality, gained the lead in the Unix virtualization race. They're still ahead now, IMO. For some reason, HP seems to always get left out of this conversation, even though they have much of the same virtualization mechanisms as Sun/IBM, but just haven't done a good job of marketing them.
On the x86 virt front, Sun does have a pretty good story, but they need to get their hypervisor out the door pronto, also the pricing/support needs to be solid. As for buying SWsoft/Parallels, it would have been a good idea a year ago, but it would take some time to get Solaris support into the products - time that Sun might not have now. I expect that Microsoft and other players might be sniffing around Parallels now...