Their market is all extreme sports, and a Go Pro, or a Drift etc etc are desgined to take the high impact stuff that phones can't, ie they don't break as easily as a phone screen.
Totally agree with youWhat GoPro needs to do is to differentiate itself from the competition in software. No matter how you look at it any Hardware R&D they roll out will be copied 1 to 1 for a lower cost by the chinese in no time.
If they continue to insist on merely selling cameras for a bloated price, they will fall because I'm not buying that shit.
But if they can convince me that buying their overpriced camera means I have a strong software editing suite with support, it's a far more compelling argument that can be used to attract professionals and enthusiasts because the casual market is already a lost cause.
The biggest thing I think gopro still has going for them is the ability to use external audio. There are a couple knock offs that have the option, but from the tests ive seen/heard, they arent worth using. Most people who use external audio dont want to mess with a separate recorder and sync them up in post. If the competitors can get that issue straightened out, I think you will see a major switch to these cheaper brands.