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From a 1986 Fortune article: "With pretax profits running as high as 34% of revenues, Microsoft needed no outside money to expand."

[1] http://fortune.com/2011/03/13/inside-the-deal-that-made-bill...

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Why doesn't Twilio have 34% profit margin? Because their price is low and their costs are high. If they increase the price of their product and cut certain costs, they would have similar profit margin to Microsoft.

The big question is the elasticity of their market. Microsoft could charge high prices because they were pretty much the only game in town first for microcomputer programming languages and then for PC-compatible operating systems. If they raised their prices, what would their customers do? Not write software? Write for a platform that has no users?

If Twilio raises their prices, will they make more money? Or will it cause people to not use Twilio, either opting for competing free services or using alternatives to SMS entirely? I don't know, and I don't think Twilio does either; hence the profitability risk.

They also don't own the networks they operate on.

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