You're correct that the cell phone has killed off the low end. People used to believe that they needed a proper camera to get their casual snapshots, but more and more they realize the camera built into their phone is perfectly adequate to the task. So fewer and fewer people are buying those "proper" cameras, leading to the reduced volumes. But reduced volumes lead to reduced revenue, and reduced revenue is poison to any company. So they compensate by raising prices. People generally respond poorly to raising prices for no reason, so they make the goods better to justify it. The methods used to make them better are irrelevant.