At least IT isn't fooling itself again

You're likely as sick as I am hearing about our supposed inevitable rendezvous with Armageddon. But there is a major difference between how the technology industry handled the dot-com bubble burst and how it's managing through one of the more extraordinary periods in the history of capitalism.

First, the bad old days. You doubtless remember irrational exuberance. With the exception of Cisco's John Chambers and a handful of other executives who were among the earliest to warn that clouds were gathering, most of the digerati in late 1999/early 2000 remained blithely upbeat about the future--until, that is, it was too late.

This time around their mood is quite grim and perhaps that's the best news anyone could have asked for.

•  Expecting the worst, companies are ripping up their budgets and starting over from scratch.

Who knows how IT managers will react if the bottom completely falls out. But so far, I'm not seeing signs of panic. What's more, any company that survived the near-death experience of the 2000-2002 IT recession presumably logged enough institutional knowledge to help get through the tough times once again.

Don't take this as reason to pop out the champagne. Nobody really knows how "tough" things are likely to become and there's little clarity about what's supposed to happen next. Speaking after the company posted its third quarter results on Tuesday, Intel's CEO Paul Otellini said fourth quarter sales could be anywhere between $10.1 billion and $10.9 billion. Which result is more likely? The best answer is that it all depends--hardly.

I was talking earlier with ZDNet's Larry Dignan, who reported on Gartner's IT conference held this week in Orlando, Fla. Larry, who picked up on a more sober vibe at the conference, which attracts a roster of major hitters from the IT business each year, also heard that there will be increasing customer pressure on vendors to renegotiate terms of existing contracts.

That's quite an interesting news nugget to consider. If that behavior becomes the norm, it is going to severely pressure profit margins at the big software makers. (And put a major hurt on the smaller ones.) That assumes customers will have the upper hand in any negotiation. But with the Dow Jones Industrial Average collapsing before our eyes, the old rules don't apply.