You might say the tech sector has fallen into a healthy state of competitive ferment. Or, then again, you might conclude a big shakeout is about to begin, with too few new products and too many companies trying to get into each other's business.

Dell, for example, reported that its third-quarter profit jumped 25 percent on increased shipments of personal computers, notebooks and servers and continued improvement in profit margins. Much of Dell's gain, however, is coming at the expense of less nimble and efficient competitors. And growth in overall corporate spending for technology is beginning to slow to a level more consistent with replacing old systems and technology than with aggressively investing in new ones.

At the companies that make the semiconductors at the heart of those computers and servers, sales have slowed and inventories have risen for most of this year. The industry's trade association now forecasts virtually no growth for 2005. Excess capacity is part of the problem, along with an absence of technological breakthroughs. Intel, the world's largest chipmaker, has delayed or canceled five products this year alone.

Google, the search engine, has been a big hit on Wall Street since its IPO earlier in the year. But last week it got the first real taste of competition from Microsoft, which is late to the search engine game but not without resources. There is renewed competition from Yahoo as well. Whether the market is big enough for all three to thrive is still unclear.

Meanwhile, customers remain reluctant to purchase big new systems, preferring incremental improvements that can pay for themselves in operating savings in the first year. And increasingly, companies are turning to lower-cost systems based on Linux and other "open source" software, which has begun to cut into the profits and prospects of traditional industry leaders such as Microsoft, Oracle and Sun Microsystems.

Internet phone companies got a big boost from the Federal Communications Commission, which ruled they should operate free of state regulation. That should give the upstarts a boost in competing with traditional phone companies, which are now scrambling to set up their own Internet phone service. At the same time, those phone companies are investing heavily to compete with cable and satellite operators by offering integrated packages of telephone, video and Internet services.