As they face the economic downturn, technology market leaders such as Cisco, HP,  Microsoft and Oracle have a huge advantage over big companies in most other industries -- strong balance sheets.

The giants hold almost no debt and lots of cash, which means they're in a position to acquire smaller companies to boost revenue growth.

"Everyone is looking at the chessboard," says Mark Zanoli, managing director and head of tech investment banking for JP Morgan.

Zanoli, whose firm (along with the now-defunct Lehman Brothers) advised HP on its  $13 billion acquisition of computing-services firm EDS, doesn't expect any action until early next year.

Like the private equity investors we told you about last week, strategic buyers will likely wait to see just how bad fourth-quarter results and 2009 outlooks will be before putting their cash to work.

HP expanding its services business was not a huge surprise, since the company previously had tried to acquire the consulting business Price Waterhouse Coopers.

But the type of strategic move it represents, moving into a market that has not been the mainstay for a large company, is something Zanoli expects to see more of.  

As cloud computing and software as a service proliferate, hardware and software makers will see increasing market overlap.

"All of the big guys are looking at each other and trying to figure out how they can get more of each other's business, Zanoli says.