Despite what some other outlets are saying, the Apache Harmony project is not dead. Evidently, Tim Ellison, a senior developer on the project, said things would wind down soon for Harmony. But Geir Magnusson Jr., creator of the Harmony project and member of the Apache Board, when asked if Harmony was coming to an end, said definitively "no."
Apache has no plans to scrap Harmony. IBM wanted to support OpenJDK, and that's fine. At the Apache Foundation, the people are participating as individuals, so IBM is not a member of Harmony. My assumption is those employees that worked on Harmony before will now work on OpenJDK.
And, certainly that's a big loss. It's not a good thing for Harmony at all. But keep it in perspective: For the Apache Foundation, it's up to the community what will be done. We do what the community wants, not what the board wants. We have retired projects before, and if the community decides that's what it wants to do, fine. But there are a lot of phones in this world that are running software that came from the project. Android uses the Harmony class library.