Hi Geoff,
The prices you see give you hosting and support. If you are a small business owner that can carefully read directions, you can download the free version and install it on a $10/month webhosting account. That'll give you many useful features, and the only thing missing will be the more advanced reports (if I remember right, from the last time I looked at SugarCRM). If you are a systems integrator or VAR, you can download the free version and make money on training or selling a hosted SugarCRM service (again, from a $10/month webhosting account or your own servers).
You are correct in that it's not a full ERP solution, it's more comparable to Salesforce.COM. However, with the mature Open Source accounting packages (vis-a-vis Quasar Accounting at
http://www.linuxcanada.com), a competent developer could integrate the two in a couple of weeks' worth of work and then have something comparable to Interprise or NetSuite, at zero cost. But, you make an interesting point:
Larry Ellison? Didn't he have more than
1.7 billion dollars in personal debt at one point? In any case: maybe I'm new here, but I don't understand why a VAR would base their livelihood on something they can't fix, support, or upgrade themselves. While it may be easy money, it also ties you to the 'parent company', in this case NetSuite or SAP. If the 'parent company' decides that it needs to make a boat payment and increase next year's license fees by 100% (without providing any additional value), it can do so and your customers have no recourse except to pay the additional fees if they want to continue using the software. This is not a free market at work, it's an anticompetitive economic hack.
A key economic point: software companies need artificial scarcity to continue deriving income from their various sources. In a true free market, I doubt prices would be as high as they are for these products, and software companies would be unable to increase their license fees simply because they want to.
I think one of the best examples of free market in action I've seen (besides the Open Source offerings) is Interprise Suite, as Gary has priced his product very competitively - much closer to its true worth than NetSuite / SAP. He also gives his customers an excellent sense of security by giving the source code to paying customers. Would you ever get that with NetSuite or SAP? Interprise is the best "open source lookalike" I've seen, with the software company being able to make money and still provide real value. The only issue I have with Interprise is that it's based on Windows, so support costs for installations are higher than they would be otherwise (to maintain and patch the operating system, database, purchase licenses for OS and database, etc) and it's very hard to guarantee any semblance of security. But that's a discussion for another day...