Machine costs decrease every year; how long can this go on?

Hardware cost reductions should continue. At least in the entry level, we can distinguish two pricing models: constant performance with reducing price, and constant price with increasing performance. It is better to make comparisons using the price/performance ratio. It should be noted that the increasing investment necessary to build such systems will reduce the number of vendors, and that such a reduction in competitors could diminish the rate of cost reduction.

As to software, the logic of a volume market works as well as for hardware. And phenomenon of free software will tend to stabilize or even reduce the cost of commercial offerings.

Source of Information :  Elsevier Server Architectures 2005