October 23, 2008, 8:27 PM — Sun Microsystems hasn't had much good news to report lately, so it wasn't surprising that it went into spin mode Thursday after startup company Arista Networks announced that it had snared Andreas Bechtolsheim, Sun's chief scientist and a highly regarded systems designer, to be its chief development officer.
The announcement led to a flurry of reports that Bechtolsheim had resigned from Sun, something the systems and software company strongly denied. It blasted an e-mail to reporters Thursday morning, calling the reports inaccurate and saying that Bechtolsheim will "continue his present involvement" with Sun, albeit on a part-time basis.
That sparked a brief tug-of-war between the companies. Mark Foss, Arista's director of marketing, said in response to Sun's e-mail that "as far as we're concerned" Bechtolsheim is working full time for Arista. "There's a miscommunication between Sun and us," he said. "We're working with Sun at the moment to clarify the situation."
Bechtolsheim has now clarified it himself. In an interview Thursday he confirmed that he works full time at Arista, where he is also chairman and cofounder, but that he'll continue to advise Sun on a part-time basis. "That's the legal status," he said, adding that he'll work for Sun "no more than one day a week."
"Sun has a very busy product schedule ahead of itself," Bechtolsheim said. "The products for the next year, if not the next two years, are all laid out. There are sometimes questions that come up that they'd like to call me back on or ask me about, and I'm happy to help them out on that basis."
"This may change in the future," he added, "but for now I'm still going to help Sun out on a part-time basis."
Bechtolsheim said he was moving to the networking startup because there's little room left for innovation with industry-standard servers, which is what he worked on at Sun.
"I'm really driven by the opportunity to innovate, and quite frankly the server business is getting more mature," he said. "It's basically difficult to add value to industry-standard servers built around Intel and AMD CPU chips, whereas the networking space has a lot of opportunities remaining in terms of the ability to innovate."
Sun has had enough bad news this week already, which could explain attempts to play down the departure of Bechtolsheim, who is also one of its founders. On Monday Sun warned it would report a big loss for the past quarter on declining revenue, which sent its already-flagging stock price lower. Then on Wednesday Sun's largest shareholder said it would take a more active role in the company to help maximize shareholder value.
The shareholder, Southeastern Asset Management, hasn't said yet what it plans to do. Dan Olds, principal analyst at Gabriel Consulting Group, said possibilities include trying to sell off some hardware assets, making changes in senior management, or making Sun a private company, which would relieve pressure to meet quarterly earnings forecasts.
Olds said that, according to Sun employees he spoke with, Bechtolsheim had already been scaling back his day-to-day work at the company. "One person told me repeatedly that he's the best systems designer they'd ever seen in terms of packaging, but that he's been gradually disconnecting over the last several months."
Bechtolsheim invented Sun's first workstation product and has a reputation as a brilliant systems designer. He left Sun for the first time in 1995 to found a Gigabit Ethernet company that was later acquired by Cisco Systems. He returned to Sun four years ago to design its Galaxy line of industry-standard servers. His return was supposed to help make Sun a hardware leader again at a time when its pricey Unix servers were falling from favor.
Networking stayed close to Bechtolsheim's heart, however. He cofounded Arista Networks at about the same time he returned to Sun and held a seat on Arista's board. Along with his appointment as chairman and chief of product development Thursday, Arista also named Jayshree Ullall, a senior vice president with Cisco Systems, as its president and chief executive officer.
Arista, which shipped its first products earlier this year, aims to "solve the problem of interconnecting large data centers with high-speed Ethernet," Bechtolsheim said.
"One unfortunate thing here is that people are focused on me leaving Sun, but the exciting part is actually this cloud networking story we are building here," he said.
