I've heard these same things echoed from non-technical book publishing experiences too. The publishers are quite simply middlemen, they can front some production costs to get books in to brick and mortar stores but expect very little unless you have a proven track record and you give a lot up for that. A friend wrote a book (a novel), found a publisher, and basically he was going to pay for everything, literally, pay for the first round of published books, pay to promote, effectively self-publishing the book but sharing the profits. His best avenue for making money on it is to sell the books himself on amazon. Never mind the crappy nature of so many technical books anymore.
Technical books, with technical audiences? Short of the tiny amount of money upfront, I can't see at all why you wouldn't self-publish. The audience is forward thinking, they get it.
Unfortunately the answer for your friend is simple: He got scammed. If a "publisher" asks you to pay for everything, or indeed for anything but postage, they are a scammer. There are entire message boards dedicated to authors warning other authors away from such scams; look e.g. for Absolute Write's "Bewares" section or google "Yog's Law" ("Money flows toward the writer.")
Paying for your own publication costs is called vanity press publishing, and it's okay provided you know what you're doing: You are almost certainly taking a big loss in order to get your work into paper form. You will only make money if you've got publishing talent, which equates to "marketing talent": You've got to be good at selling books, which is very hard, especially if you've never done it before.
(Before I got distracted by the story of your poor friend, I was going to answer: many do self-publish, more and more every day, but you don't notice them as often because they aren't as well promoted. Also, whereas it's fairly easy to market tech books online non-tech books are far harder to sell without market knowledge that publishers have scraped together over decades, non-techie writers therefore lust after contracts, and techies imitate non-techie writers. And, because getting a publishing contract probably increases the odds that your book will get finished, because someone else is pushing you toward completion, when we survey the universe of manuscripts we disproportionally sample the ones that get turned into finished books by publishers.)
(And, yes, e-readers are busily upending this centuries-old industry, so ask again in five years for a completely different answer.)
Oh but they are: the number of technical howtos and tutorial on the internet is huge. Just because they are not collected and printed on dead trees doesn't mean they are not published.
I suspect he found what's usually referred to as a "vanity publisher", i.e. one set up to service people who have rather more faith in the viability of their book than they should have.
Such publishers are, in general, not particularly nice people (my first paragraph originally said "fleece" rather than "service" but honestly in most cases the mark wants to be taken).
I've heard these same things echoed from non-technical book publishing experiences too. The publishers are quite simply middlemen, they can front some production costs to get books in to brick and mortar stores but expect very little unless you have a proven track record and you give a lot up for that. A friend wrote a book (a novel), found a publisher, and basically he was going to pay for everything, literally, pay for the first round of published books, pay to promote, effectively self-publishing the book but sharing the profits. His best avenue for making money on it is to sell the books himself on amazon. Never mind the crappy nature of so many technical books anymore.
Technical books, with technical audiences? Short of the tiny amount of money upfront, I can't see at all why you wouldn't self-publish. The audience is forward thinking, they get it.