I see several contributing factors to why the tech stocks began to collapse in March of 2000:

1. In the previous two years, companies and individuals spend billions upgrading their computer systems for Y2K. They wanted to get some return on their investments, so hardware and software sales dropped in 2000.

2. A lot of people decided their current computers were fast enough, so they got off of the upgrade gerbil wheel. As an example, my home computer is almost 4 years old. It's fast enough to meet my home needs. I'm thinking about upgrading this year, but I really have no good reason to do so.

3. The Internet stock bubble burst due to economic reality setting in. Those "New Economy" gurus were shown to be either idiots or frauds (there were a lot of both). People began to wonder when they were ever going to see a profit from their investment in www.dumbassidea.com and the answer was never. When people quit pumping new money into these companies, they collapsed from their own inept business plans (such as the pet food website that promised to sell their wares cheaper than you could get it at the corner grocery store, only they forgot that it costs a lot to ship a 25 pound bag of dog food). The collapse of so many Internet companies the economy in several ways:

a. A lot of people lost a buttload of money, so they slowed their spending (reverse wealth effect).

b. Due to projections of unsustainable growth in the Internet companies, a lot of telecomm companies spent billions increasing their bandwidth. When the Internet companies collapses, there was a lot of surplus capacity out there. Several telecomms ended up in bankrupsy.

c. The Net companies had spent a lot of money for high end servers, routers, and other infrastructure. When they were liquidated, you could buy this equipment for a fraction of the original price. This hurt companies like Compaq and Cisco who were competing against surplus sales of their own equipment.

d. A lot of relatively highly paid tech workers lost their jobs. This hurt not only them but their communities, too, because their spending reductions rippled through the economy. Here in Colorado Springs, some 8,000 tech workers lost their jobs. The local Chamber of Commerce estimates that two other workers lost their jobs for every tech worker job loss, primarily in retail and the restaurant industry.