What happens when your single server solution is disconnected from the network for whatever reason or you exceed the current configuration? Bad times i bet. Cost of components isn’t the only factor here.
The area we were in, customers could tolerate some outage. Restoring from a backup didn't take that long. I believe we were known for good support helping people get back up.
But yeah, what you are saying is all the arguments that kept coming to us. People were used to having a few servers for the database, and different front ends, and layering things like that.