I rahter suspect most people currently buying an entry level dSLR already have a camera phone (and in the US, odds are it's a smartphone with a decent camera), and are buying a dSLR because the camera phone isn't meeting their needs.
Do you a lesson on the effect of sensor size on image quality? Maybe I'll let Phil Schiller school you…
iPhone 5s has 'bigger and better' pixels that are 1.5 µm in size. The T3 has 'biggerer and betterer' pixels that are ~3.5 times larger, in a sensor with an 18 times larger area. Bigger sensor = better picture.
Sure, you can use a good processor and apply gobs of noise reduction. Unfortunately, it isn't free - it comes at the expense of lost detail.
Darn, those clues are so bloody elusive…I see you still haven't found one yet. Keep looking...
Pay attention dude, we were talking about video. And how you downsample/process your pixels can have a dramatic effect on IQ. The iphone is just better at that.
I never claimed it had better low light performance in stills.
Also, the market segment you describe must be huge, of young couples with children (as you mentioned earlier) who have iphones, are tight on money, but can afford to throw away 400$ on a marginally better imaging device.
You should apply for a job at Canon.
The point is, there isn't a profitable niche in IQ BETWEEN the iPhone (or comparable) and 100D @~$400. I'll further remind you that that's also where the Nikon 1 and Canon M live (in terms of price).
So either they release a product that cannibalizes the sales of the 100D because it's effectively just as good for less money, or they make it noticeably worse and it fails because that means it's no better than its price competitive alternatives(above phones or mirrorless cams).