The reason for the poor sales of point & shoot cameras is more to do with the lack of interest of casual shooters, in any serious camera functions... any decent P&S camera will take better photos than a smartphone ... but casual shooters don't care about most of the stuff a serious photog would, the casual shooters only care about capturing the 'moment' they like and share as fast possible with a device that they are already carrying, regardless of the 'quality' of the image ... like my wife who likes the images of her iPhone ... the other day she took an image of a flower which to me looked very ordinary and bland, but she liked it coz it reminds her of a moment she cherishes ... she doesn't care about shutter speeds, fstops, ISO etc ... I think a vast majority are like that, for them carrying another device (P&S camera) is more of a pain, while they can 'get by' with their camera phone. A case in point is the Samsung Galaxy smartphone with a zoom lens, which has far better options (as a camera) than any smartphone, but it isn't selling like hot cakes.
Reinz...I think you've hit it the nail right on the head with your comments....the average person just wants a photo of decent quality and they don't want to carry around a phone and a camera, and that is what smart phones can provide now days.(4 or 5 years ago, "no", the quality wasn't quite there yet, but today's smartphones "yes".
As a serious photographer, even I have found myself leaving the dslr at home and just taking my Samsung galaxy 8mp with me when I'm out with the family..etc....it's just so much more convenient and practical.