Also remember, that $500 for a PC (thin client) is cheap for a business. Yes a normal PC may cost that much, but then add warranty support, upgrades, etc... It adds up quick, and companies get hit by the extras. Even a good deal for a large business is hard to keep under $1200 or so. The PC companies know who has the money, and they get it one way or another.
Not to mention, thin clients really let you cut down on costly IT requirements. Staff is expensive, double your salary and that is the base cost to the company. So even an average help desk person is costing anywhere from $60000 to $80000 depending on the market. Not cheap. Now add a full staff of networking experts and admins to that. With a huge server farm you can cut staff requirements by more than 1/3. Over the course of a few years, that alone saves enough for the added cost of redundancy.
Plus, there is another growing trend of small and mid sized companies that do not want and can not afford an IT staff. Solution, thin client connections to an offsite, backup up, and redundant leased server. It will provide them with 10x more reliability than an in house IT staff.