Still Searching for the 'New New Thing'

Hey tech fund managers, have any of you seen the new new thing?

There was once a time when investing in technology meant more than picking sides in the seemingly apocalyptic struggle among Google(GOOG Quote), Yahoo!(YHOO Quote) and Microsoft(MSFT Quote) for sole domination of the Internet.

Yes, back during the bubble, investors went off in a thousand different directions searching for the next great tech breakthrough, or, to use a term coined by author Michael Lewis for his book about Internet pioneer Jim Clark: "the new new thing." Of course, most folks would like to forget those wild and wacky years and, most especially, the money they lost.

But while retail investors may have given up the search for the new new thing to focus instead on their new new condo, McMansion or co-op, technology fund managers are still charged with scouring the public investing world to find companies with the power to transform. Except this time, they are looking for some profits and maybe a decent multiple as well.

"A lot of people want to find the next killer 'app' or the next big earthquake in tech, but there are smaller revolutions going on," says James Morrow, portfolio manager for the $1.9 billion (FSPTX Quote)Fidelity Select Technology fund. "You just have to find them, which isn't easy."

Revolution Spotting

Morrow sees those revolutions forming in advanced materials for semiconductors, energy conservation and Web-based software. And in the case of the first two, he says the twain could soon meet as both technologies are refined.

"Semiconductors are hitting the wall in terms of Moore's law," says Morrow, referring to the observation made by Gordon Moore, co-founder of Intel(INTC Quote), that the number of transistors per square inch on integrated circuits would continue to double every year for the foreseeable future.