I find it hard to believe that a few nonsensical hardware startups are responsible for lowering prices. The production sizes are just too small to have an effect on China's massive output.

That's kind of the whole point - the big manufacturers affect only the upstream providers of various scaling technology, tools, components and manufacturing systems suitable for mass production of very large batches; but the startup&maker ecosystem creates a market for a different kind of tools, vendors and components - ones that are useful for prototyping and building cost efficient small batch products.

Well, the iphone...

But the "cost" I'm referring to isn't just money. It's the amount of people who have done it, the expertise that's out there, the incubators, the support networks, the people willing to invest in hardware, etc, etc, etc.