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Casado announced this week he would leave VMware on April 1 to join venture capital firm Andreessen Horowitz as a general partner. Rajiv Ramaswami, a former Broadcom and Cisco executive, will replace Casado as executive vice president of networking and security, and head of VMware's SDN tech strategy.
Casado is the latest high-profile executive to leave VMware after EMC announced last October it would sell itself to Dell for $67 billion. Uncertainty over the pending acquisition, combined with weak sales and profit forecasts, drove the price of VMware shares down 31% last year and 14% this year, according to Bloomberg.
In January, VMware announced the exit of CFO Jonathan Chadwick and the elimination of 800 jobs. EMC CFO Zane Rowe is scheduled to take over for Chadwick on March 1.
Put all the changes together, and Casado's timing could have been better.
"The thing that makes it hardest for me to leave is that, with the weaker macroeconomic environment and Dell-EMC, VMware needs very strong leaders," Casado told Bloomberg. "There is a level of uncertainty, and so the timing isn't perfect."
Analysts brush off Casado departure as SDN tech strategist
Despite the bad timing, industry analysts shrugged off Casado's exit.
"VMware is going through a rough patch, but the company isn't in mortal danger," said Brad Casemore, an analyst at IDC. "It isn't in any sort of existential uncertainty."
VMware's strategy for remaining a major technology provider as the industry shifts from hardware- to software-based networking remains stable, analysts said. The virtualization software maker's key product in the SDN tech market is NSX, which is based on Casado-developed technology. VMware acquired the technology in 2012 when it bought Nicira, a company co-founded by Casado.
"NSX will be a viable product for a long time," said Patrick Filkins, an analyst at Technology Business Research Inc., based in Hampton, N.H.
Nevertheless, VMware is likely to miss Casado. Besides his technological prowess, Casado has proven to be a capable senior executive. As head of VMware's networking and security business, Casado tripled annualized revenue to $600 million last year.
Going forward, Ramaswami will lead the charge against Cisco, which competes with VMware for the SDN business of large enterprises. VMware takes a software-only approach to SDN, while Cisco links its technology, called Application Centric Infrastructure, to its Nexus switches.
"I could see NSX picking up steam in the small and medium-sized business market next year, if Dell throws a pared-down version of NSX into the channel and attaches its services," Filkins said. "Cisco largely ignores this opportunity."
The best Cisco has for this SDN tech market is "pared-down Nexus switches with SDN functionality," Filkins said.
Cisco and VMware sales teams are likely to clash in selling SDN technology for hybrid clouds, a growing enterprise market. A recent IDC survey found 44% of enterprises planned to increase cloud spending over the next two years, with more than 70% of heavy cloud users thinking about a hybrid cloud strategy.
Companies interested in NSX "should not be dissuaded from considering it because of Casado's departure," Casemore said.
How SDN and network virtualization work together
SDN's promise in hybrid clouds
Differences between Cisco ACI and SDN