There are people that appreciate a premium product and are willing to pay more, and those that aren't. It's why Toyota and BMW are both successful companies. It's also why I call BMW an "exceptional company" even though their products are significantly more expensive. I certainly appreciate your position and it's one shared by a lot of people. I don't think that makes either of us wrong, it's just a difference of opinion. But it's also why I'm less concerned over market share and who makes a genuinely better product, which for me, currently, is an iPhone 5S. And before you get your pitchfork out, I was a Galaxy Nexus user before this and I thought it was a really good phone.
But I have to disagree with your use of the phrase "price gouge" when referring to smartphones -- there are plenty of alternatives out there. Maybe I just use too narrow of a definition of the term but I typically reserve the phrase for some kind of necessary or somewhat necessary commodities that someone has the only supply of for sale.
Remember that even though Apple's PERCENTAGE of the overall smartphone marketshare is decreasing, their TOTAL marketshare is INCREASING, just not as fast as the total market size, mostly because the market is increasing into areas that are far more price conscious (read: China). But, Apple just signed this deal with China mobile so I'll be very interested to see what happens. This is the huge growth market for Android that has allowed it to rapidly outpace Apple's growth with incredibly cheap, low end Android "smartphones".