The price of Apple's smartphones hasn't really changed much since they were released in 2007, meanwhile you can get a 'good enough' smartphone for $99 off contract.
I don't think people are idiots.
I would buy a $99 iPhone if I could.
You must, because plenty of folks are buying phone thats are more than $99 right now, and at best, the only decent $99 phone is the Moto X on Boost Mobile, or Verizon Prepaid or MAYBE the Nokia 520/521. Fact is there will always be people that will buy higher end/more expensive smartphones,,,,it's like saying there is no market for luxury vehicles because of the countless cheaper alternatives.
In regards to the laptop market, and the original post, most people that want an apple device go straight to the source for it, unless they don't have an apple store in their area. Overall however, i think as time goes on you will see more people get cheaper alternatives (chromebooks, tablets) because general speaking most consumers use computers nowadays for consumption, not creation, and you don't need a powerful computing device to do that.
Desktops will still be sold because you will always have pc gamers, and content creators will still need a machine with decent power, wether that be a mac or Windows machine will come down to their OS preference more than anything else.