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."