Spending Bounce Eludes Big Tech Firms

Assuming all things are cyclical, investors hunkered down through the slide, expecting a big upswing as the tech market and the economy regained equilibrium. The patient approach seemed to be paying off early in 2004, as the shares of tech's so-called four horsemen -- Microsoft, Dell, Intel and Cisco -- staged a January revival.

But as critics such as RealMoney.com pundit Paul Kedrosky point out in his tale of the tech-opalypse, the Internet has already been invented, and there appears to be nothing quite as momentous waiting in the wings.

Meanwhile, corporate spending priorities have shifted. During the boom, businesses embraced tech at all costs. But today, tech is just another cost to be avoided if at all possible. For that reason, assumptions about pent-up demand for IT gear are dissolving, say analysts.

"In the 90s we had a whole crop of new applications like [customer relationship management], we had the World Wide Web and remote access that all drove network spending," says Sagawa. "We don't have any compelling new technology like that today."

Take Cisco's much-delayed top-of-the-line router -- nicknamed the huge fast router, or HFR. The highly anticipated device promises to be one of the largest leaps forward in Internet traffic-sorting hardware. But Cisco hasn't announced a customer for the big box yet, causing some to wonder if the big Net spending is exhausted.

"I just don't see a lot of demand for it right now," says Telecom Pragmatics analyst Sam Greenholtz. "There's been a lot of talk, but no one's breaking out their checkbooks."

Cisco didn't immediately return a call seeking comment.

While trimmed spending and a lack of so-called killer apps certainly plays a role, American Technology Research analyst Albert Lin says the tech slump is part of a bigger pattern largely isolated to North America.