They are not luxuries to the extent you're implying. Your lifeline needs to be dependable and high quality. People inherently understand the value of tools and paying for something that'll get the job done reliably.

People spent in aggregate way more to accomplish fewer things before the iPhone (or equivalent high-end Android phone).

My smartphone is my primary camera, my communication device, my transportation lifeline, my business operations lifeline, etc etc.

I can't afford for this one thing to be the point of weakness. $1000 is extremely cheap relative to the value I get out of it - it would be a waste of time and money for me to skimp here. Not to mention, once you're in the ecosystem, breaking your workflow is extremely expensive so there's an element of lock-in.

Apple are in a stronger position than anyone gives them credit for.