Personally, I'm surprised at the $500 budget. Maybe coffee costs more in Australia.
* Web hosting: $4.40
* Static IP: $3.30
* Domain name: $13
* SSL certificate: $66
* SMS modem: $172.50
* Bank account: $6.50
* SIM card: $5
* Custom number: $22
The costs [0] look reasonable to me and the coffee is better in Aus :) ~ http://searchyc.com/bootload+coffee[0] http://www.semi-blog.com/2010/01/startup-in-7-days-day-two-r...
Didn't see that one.
SMS to web gateway, process the data, update the database, connect database to website, make functional website.
These are not super complicated on their own, but having them work together well and meet user expectations/needs is another matter.
He can then sell the service or advertising on the page. Sounds like a startup business to me. Not huge or sexy but money in the bank if done well.
Advertising is a pretty easy hook up as well, depending on the service.
Take a look at glunote.com, it's something that I threw together over a rainy weekend (and it certainly looks like it). It's for taking notes using Twitter and is probably at least as complicated as what he's doing. I'm sure there are a lot more examples around.
..all but that last step are basically free with google app engine