Place fewer, bigger bets. That is the conclusion that technology companies slugging it out in some of the most fiercely competitive parts of the industry have reached as they grapple with two conflicting pressures: how to boost profit margins, while investing in the new technologies necessary to fuel future growth.

Hewlett-Packard and IBM - the world's two biggest IT groups by revenues - each increased their research and development budgets by less than 1 per cent last year, while rival Sun Microsystems trimmed its spending, reflecting pressures on the big systems-makers to focus attention on the parts of their broad technology portfolios with the biggest potential.