Sun cold in the channel

First to go were the design agencies, over-stretched and fat from life on huge marketing budgets of the 'old companies' stampeding online. Projects were never on time and never on budget but no-one minded.

But the wave is spreading beyond bandwidth merchants and design agencies. The hidden horror now is the hardware vendors.

Despite profit warnings and vastly lowered expectations, many of these companies are sitting on a time bomb. They may have planned for lowered demand in the next few months but they're ignoring a far worse problem.

Their enthusiasm to put the 'dot' in 'dot-com' has left their warehouses full of high-end servers and routers looking for homes. Yet once the receivers get called in to companies that have bought the kit, second-hand prices exert huge downward pressure, even on new kit.

Traditionally, bankrupt businesses hope to get back around 10 pence in the pound, or less. Bankrupt high-tech ventures are shovelling out second-hand machines faster than Sun can make them. And second-hand prices are as low as one-twentieth of new.

Most observers are predicting more victims in the next few months. More victims means more people looking for work but also more high-end hardware looking for a new home.

Which almost makes you feel sorry for Sun dealers trying to sell nice new shiny boxes for £2m and competing with 'hardly-used, twice-nice' boxes for £80,000.

Sun is not alone. Companies such as Cisco will start to suffer soon. In fact, anyone who targeted technology-fuelled companies and was able to scale-up production fast enough will be left with egg on face and a channel stuffed with second-hand kit.

It's tough at the top.