Java development in embedded systems is on the rise. According to an Evans data survey (of an admittedly pathetic 400 or so people) the use of Java in embedded projects is up 10% to 36%. Normally the embedded landscape is made of assembler or the like for the specific platform. With the use of an embedded JVM however, object oriented embedded programming comes alive. Most developers still use a Sun implementation, J2SE or J2ME, but many also use IBM. (Sounds a lot like the server side breakdown).
For more see the linked builder.com article. Java: Not just for the server anymore?: builder.com
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