Will small businesses — and possibly larger ones — get so used to hunting for low cost and free technology options to save money during this recession, that they become unwilling to pay higher prices? I suspect we are deep in the midst of that happening.

The New York Times had an interesting story earlier this week on this very topic, noting:

“Meanwhile, more experimental but lower-cost technologies like netbooks, Internet-based software services (called cloud computing) and virtualization, which lets companies run more software on each physical server, are on the rise.  * * *

“The day of the Rolls-Royce laptop and the high-end computer may not be totally over,” said Charles King, an independent technology industry analyst in Hayward. Calif. “But certainly the audience for that type of product is getting smaller and smaller.”

Companies have also started to examine what they can do without and what they can do differently, and their choices may alter the competitive and lucrative landscape of business computing. “ 

The Times story points out what happened after the Dot Com bust of the early part of this century. Some high-flier tech companies like Sun Microsystems were dragged down as new players like Google ascended, with lower cost or free offerings.

One of the things that also happened post Dot-Com bust is that businesses started getting a taste for technology that was inexpensive or free.

That’s been a trend over the past decade, and I think it just intensifies during times when money is tight.

I could give example after example of technology on a unit-cost basis going down.  But does that spell doom (or lower sales) for technology makers across the board? Not really.  It’s just forcing vendors to change their business models.

But for small businesses that are end users of technology, it’s a bonanza.

What is happening is that we are approaching a world of disposable technology. We replace technology a lot faster than we used to. I used to expect to get 3 to 5 years usage out of a computer. Now, I start looking for a replacement at 18 months. The improvements are happening so rapidly, and the prices of new computers have dropped so much, that it’s the veritable “no brainer” to upgrade.

Plus, the demand for more and different kinds of technology grows. We just buy and use more technology in the aggregate. Today there’s a software app for just about everything, it seems. I’m like a kid in a candy store when it comes to business technology, because I have seen productivity improvements from automating chunks of my business processes. The costs are low and so my financial risk is low to try new hardware and software.

Consequently, I am much more likely to buy or subscribe to a software application of a type I’ve never used before. The sheer number of software packages I use now is many times more what I used 10 years ago in business. Ten years ago I used Microsoft Office for most of my business software needs — pretty basic. Today Microsoft Office just scratches the surface.  We rely on about 20 different software apps (the majority online apps) in addition to Office. And I consider most of those software apps “essential.”

With hardware, it’s a similar story.  Where once I used one computer, I now regularly use 3 computers with (soon) five monitors — just for me alone.

Same thing when it comes to gadgets — I’m not much of a gadget person (getting no intrinsic joy out of playing with electronic stuff), but I find myself with 3 or 4 times more productivity gadgets than I’ve ever had before. The mobile phone, the iPod Touch, the various Bluetooth headsets, a bazillion flash drives, the digital cameras, the video camera, the business card scanner — the list goes on.  Not to mention all the services I pay for to go along with these gadgets…

Some technology has dropped in price to the point that it almost in ”impulse purchase” range.  I no longer agonize over a purchase, because today it might cost $135, or better yet $9.99 a month, compared with buying something similar seven years ago that cost $1,000.  At such low price levels, there’s no need to think as long and hard about that purchase. If it doesn’t work out, well, you don’t have much invested in it, so each individual purchase is not going to be a financial risk.

So, while the costs of individual items of technology or software applications may go lower and squeeze profit margins for vendors on items where they traditionally expected high profits, our appetite for new technology just grows. We’ll replace hardware and gadgets more frequently and we’ll buy more readily because the financial risk for any single purchase will be relatively small.  And of course, we’ll spring for all sorts of services to go along with everything else we buy.

And the cycle of creative destruction will continue. New vendors will arise that can provide software and hardware at low price points, and who learn to make more of their profit on the services that go along with the base products.