Last week, I participated in a panel on the implications of SaaS/Cloud for SMEs.  One point that was made by several of the panelists is that a big advantage over on-premise software is that you are always on the latest version and thus get to benefit from improvements over time.  Those improvements can be additional features but they can also come in the for of reduced prices.  Amazon for example has cut their prices for EC2 and also made such cost savings available as reserved instances and most recently micro instances.   As Amazon’s resource pool grows they can drive down the cost and they are passing some of those savings on to their customers. 

Our portfolio company Twilio is taking a page from the same playbook.  They just announced new pricing that will result in cost reductions of up to two thirds for some applications!  In Twilio’s case too, the advantage of customers from participating in a cloud solution is that  everyone’s resource demands can be pooled allowing Twilio to drive down cost overall and pass some of these savings on.  Expect more of the same as Twilio continues to grow!

For all developers and entrepreneurs: Twilio is offering a creative contest prize - lunch with the USV team.  So fire up your editors …