Anyone working in the industry is keenly aware that sales pipelines are collapsing on a wholesale basis for both large and small technology companies. It's a risky gambit and sometimes fatal, but stepping on the gas when others hit the brakes can allow a technology company to overtake its mightiest rivals. Using history as a guide shows the players that performed the best following the 1985 and 1990 technology slumps typically ramped up spending and avoided cutting costs across the board.

Instead, these companies hit the gas while their competitors were slamming on the brakes. They pioneered the next generation of technology while their competitors cut back on research. They staffed up while others were laying off. They made strategic acquisitions and invested while rivals conserved their cash. The result: those that were gutsy turned in impressive gains following the slumps. And not just by outspending timid rivals. Some devised strategies and products tailor-made for tougher economic times and cost-conscious buyers.

Others fed off the misfortunes of rivals by snapping up distressed companies at fire-sale prices or by ramping up advertising and establishing brands while rival products went unheard. Great leaders don't manage for the present, they manage for the future. The conventional wisdom is to pull the wagons into a circle and try to keep the cash up, but technology isn't a conventional business.

The giants can afford to play rough when times are tough. With billions in cash, they are rich enough to invest while weaker rivals are busy surviving. No company has used its financial strength to better advantage this time around than Dell Computer Corp. When the recession began, Dell did a sharp about-face and dropped its prices to become the low-priced PC brand. The goal: to grab market share while others struggled.

It worked. Dell dropped its average prices by 17% last year, gaining 2.5 share points. What made it all possible was that Dell started off the recession with the lowest costs in the industry and $5.4 billion in cash, so it could invest in technology and plant upgrades to improve its already efficient supply chain. It was the only PC company that could slash prices and still make money.

Still, even the wealthiest players can't spend like a drunken sailor in a downturn. The winners of the past cleaned house at the first sign of a tech wreck. They quickly brought costs in line with lower demand and overhauled their operations to make them more efficient. Then they blazed new paths.

This downturn is the worst the industry has endured. It's broader than ever before, slamming not only computers, software, and semiconductors but also telecommunications. It's longer and deeper, too. U.S. corporate tech spending has plunged nearly 17% from its peak in the fourth quarter of 2000, according to the U.S. Commerce Department, versus less than 5% drops in the two previous slumps. And now the downturn is dragging through its sixth quarter, exceeding the past two. Goldman, Sachs & Co. doesn't expect a return to 2000 tech spending levels until 2004. A few companies will pay the ultimate price and go out of business. You need to get your expectations and expenses down to where there is clear and present demand today.

Downturns can provide the perfect conditions for changing the rules of the game. Lower demand and depressed prices can alter market dynamics overnight. Market leaders can be caught off-balance and companies that understand the new cost-conscious customer better than their competitors can also turn lemons into lemonade.

To get an even quicker payday, some companies are snatching undervalued businesses. Many tech stocks have dropped 50% or more during the past two years. Those who acquire now, when there is little competition from other buyers, can come away with bargains.

In the dark days of this technology slump, it's worth remembering the lessons of 1985 and 1990. For those with the money and the nerve, this is a rare opportunity to race ahead of the competition. Trust your instincts and don't slow down.