There are smart consumers. There are more affluent consumers. And then there are the "my friends have one and it is so pretty" consumers. (Most are female).I'd like to think smart consumers are a lot more clued up than you give them credit for. If your claims were that black and white, surely the iPhone would be a really poor seller generally? There must be something that appeals to the extent that makes the iPhone one of the best sellers in the flagship market. You are right the iPhone has a huge mark up, but a crap phone doesn't sell at an inflated price regardless of how much marketing it receives. What would you suggest makes the iPhone different to a mid range Android phone if in your opinion it is comparable?
I can't tell you how many times I hear women and my daughters teenage girlfriends talk about how pretty the new iPhone is and how they want it. And because they have friends that get an iPhone, so now they must have one. It makes no difference to these people if the phone is an absolute turd, as long as it looks pretty and they match what their girlfriends have.