Surprise--The Tech Industry Is Cyclical

It's a frightening picture, all right. Hordes of brash high-tech startups, all intent on grabbing a 20% share of vast emerging markets, getting massacred, their dreams crashing back to earth. Even the most respected tech companies are being forced to lay off staffers and slash spending as earnings fall miles short of analysts' projections. The press is stuffed with scary "end of history" articles about the death of the tech revolution. Venture capitalists, who just months before were throwing around money like so much birdseed, are nowhere to be found.

Sound familiar? All this happened back in 1985, in what was then the biggest tech meltdown ever. Yes, as the world has again learned painfully, tech can be a very cyclical business. That's why 1985 is worth remembering, if for no other reason than because "what happened then was exactly what is happening now," says Bill Coleman, CEO of software maker BEA Systems Inc. (BEAS ) and a survivor of the '85 shakeout.