Like all purchases, something has to make sense and improve your life, otherwise you won't buy it. Let's take the compact camera. The simple question is "Is it better than the camera in my phone?" We're not talking down to the pixel level, but basic results for most users. If this answer is I can't easily tell a difference, then there is little point. Few people take their camera everywhere with them, but most take their phone with them - the 'on you always' convenience for photography is very important.
Over the last couple years camera phones have improved substantially - the look of photos off the iPhone 5 and Samsung Galaxy S4 are excellent, and I believe you would probably have to spent $300-$400 on a camera to get better.
So what point do you add a dedicated camera to your life? The answer is easy - when the photos are significantly better. Cameras such as the Sony RX-100, Fuji X100s and others are substantial improvements.
Camera manufacturers are seeing dramatic sales drops in their low cost compact cameras, and I believe there will be few on offer in 3-4 years time.
|Nikon D600 w/ Tamron 180mm f3.5 macro|