Now come streaming TV, $200 laptops and free software.

By BRAD STONE and ASHLEE VANCE

SAN FRANCISCO - The global credit crisis may have caused the decline in consumer and business spending that is assaulting the giants of high tech. But as the dominant technology companies try to emerge from this slump, they may find themselves blaming people like David Title just as much as they blame Wall Street.

Mr.Title, a 35-year-old new-media manager at a film production company in New York, has dropped his cable subscription and moved to watching most of his television online? free. While shopping for a new laptop for his girlfriend recently, he sidestepped more expensive full-featured computers and picked a bare-bones, $200 Asus EeePC laptop, also known as a netbook.

“We’ve reached one of those moments in tech history when there are low-priced and free alternatives that are both userfriendly and reliable enough to make the switch,”Mr.Title said.“Then there’s the extra bonus of saving some cash.”

The fear now is that consumers and businesses operating with the same cost-cutting mind-set will erode the high-margin businesses of the information technology industry? slowing some technologies and companies but giving new momentum to others.

This has happened before. The dot-com bust earlier in the decade dragged down high-fliers like Sun Microsystems and America Online but set the stage for a new generation of Web powerhouses like Google and other innovative Internet software companies like Salesforce.com, founded on disrupting the status quo.

Recessions“can cause people to think more about the effective use of their assets,”said Craig R. Barrett, the retiring chairman of Intel, who has seen 10 such downturns in his long career.“In the good times, you can get a bit careless or not focused as much on efficiency. In bad times, you’re forced to see if there is a technology”that will help.

So who’s up, who’s down? Microsoft’s valuable Windows franchise appears vulnerable after two decades of dominance. Revenue for the company’s Windows operating system fell for the first time in history in the last quarter of 2008, and Microsoft said it would lay off 5,000 workers. The popularity of Linux, a free operating system installed on many netbooks instead of Windows, forced Microsoft to lower the prices on its operating system to compete.

Intel’s high-power processors are also under assault: revenue tumbled by 23 percent last quarter .

Meanwhile, more experimental but lower-cost technologies like netbooks, Internet-based software services (called cloud computing) and virtualization, which lets companies run more software on each physical server, are on the rise.

The only bright spot in the PC industry is netbooks. Analysts at the Gartner research company said shipments rose to 4.4 million devices in the third quarter of 2008, from 500,000 units in the first quarter of last year.

Two giants, Hewlett-Packard and Dell, missed the first wave of these tiny, stripped-down machines, allowing Acer of Taiwan to grab market share. Acer pushed Apple out of the No.3 spot behind H.P. and Dell as sales soared 55 percent. Dell and H.P. are making the devices now.

“The day of the Rolls-Royce laptop and the high-end computer may not be totally over,”said Charles King, an independent technology industry analyst in Hayward, California.“But certainly the audience for that type of product is getting smaller and smaller.”

Companies have also started to examine what they can do without and what they can do differently, and their choices may alter the competitive and lucrative landscape of business computing.

Hoping to save money, Arista Networks, a start-up based in Menlo Park, California, has much of its internal technology processes online, or“in the cloud.”Instead of buying its own hardware and software systems from the likes of Microsoft and Oracle, it opted for e-mail and online document services from Google and online sales and manufacturing software from Netsuite, based in San Mateo, California. It is spending a fifth of what it would be for traditional technology, said Jayshree Ullal, Arista’s chief executive.

“I think 80 percent of the new high-tech and small to mid-size companies are doing what we’re doing,”she said.

Linux has proved popular as well on a new crop of smarter devices? be they phones, TVs or set-top boxes? that have captured software developers’imaginations. The new products they build will undoubtedly challenge the status quo.

“Companies like Intel, Qualcomm and Texas Instruments that make chips for these devices are hiring Linux talent as quick as they can,”said Jim Zemlin, executive director of the nonprofit Linux Foundation.“They know the future is netbooks and mobile Internet devices.”