First, compact shooters are slowly being updated to accomodate low light shooting, a feat which smartphones have difficulty following. A large aperture lens is ungainly, silly and probably far too difficult to integrate onto a smartphone. That said, there will only be a select bunch that will buy into a compact camera for that reason alone.
No one buys a smartphone just for the camera alone. Take for example the Sharp Aquos SH-12C, a 3D capable camera with great Aquos display, you won't buy this just coz it has 3D capture capability alone, you might buy it if it is competitively priced against the next in-line cool factor smartphone. People these days decide to get devices based on how much freebies they can get out of it. Android and iOS are tops coz of the gazilliion apps on their stores. Today Nokia has the Lumia 1020, which according to some, is pure rubbish. Imaging size isn't large enough they say but who needs something larger than 8 megapixels?
The other is that the 13 megapixel cameraphone is now a reality. These cost in the ballpark of US$500 to US$700 and after spending all that money, could you justify spending it on a compact camera that cost US$300?
Apple's new iPhone 5s will be putting in a larger sensor for the camera too, rumoured to be a 13 megapixel as well to match the one found in the S4.
There are also toy cameras that offer below 8 megapixels that cost cheaper than a Lomo LCA.
Yahsica LC10 is less than US$100 and offers you 5 megapixels.
This is probably where the entry market compact camera will be found. Less than stellar, the Yashica is a fine example of a camera that is both fun to use and quirky to operate. I have a previous model of this camera the EZ-521, with the same five megapixel CCD sensor.
What's the quality like from these often derided toy camera devices? Not bad. In broad daylight, it can hold its own against any smartphone.