James Governor decomposes costs of setting up a company called Dropsend. I have written before of economics of setting up Jotspot and Flickr. The low costs are not aberrations. Each of them did not leverage the same components but between them have taken advantage of open source, Intel servers, cheap broadband, SaaS, global labor, VoIP, viral marketing to dramatically reduce cost of new launches compared to 3 , 5, 7 years ago.
These new economics (and their growing transparency) are also ones larger vendors are increasingly being benchmarked against as they talk about their pricing being reasonable. As are internal CIO funded IT projects. We are in a deflationary tech pricing market. That's part of the beauty of New Florence. And the great news is vendors can also make money and continue to deliver shareholder value - lowered pricing does not always mean lowered revenues or margins.
