You're completely ignoring price signalling for a start, which provide information to consumers about price elasticity. You're ignoring asymmetries between producers and consumers, which hide information from consumers about price elasticity (and thus affect what people are "willing to pay"). You're ignoring things like decoy effects, in which manufacturers deliberately offer extra items at different price points because of the known impact on consumer psychology. Basically, you write as if consumers are driven by a rational and fully informed decision making process, when we know with absolute certainty that this is not the case, and that manufacturers/sellers have considerable ability to shift "what people are willing to pay for it".

Also, vastly more people buy those Android phones than iPhones, which makes it less clear if the market has failed to "make something compelling" to compete with iOS, or if there is a subset of the population willing to pay a premium for specific perceived benefits, real or otherwise, in the case of iOS devices.