- the price difference between the 20D and 5D is about US$1800, well over the $1000 in your $500 vs $1500 comparison. Sensor price difference seems to be the main factor in this US$1800 difference.
You're old enough to remember the production costs of the first audio CDs and the quality control problems that, at the time, were beyond the manufacturing capabilities of Philips.
There should be no doubt that whatever the costs and difficulties that are currently associated with 35mm sensor production, they will prove to be a temporary state of affairs. That's the nature of technological progress.
You seem to be premising your arguments on the current situation rather than current trends.
I used the term 'price differential' to indicate a percentage difference in price rather than an absolute difference. In any case, the 'value' of items is generally perceived in terms of the price of alternative 'desired' items. Automobiles and houses are major and necessary purchases in life. The price of luxury items (for the non-professional) such as cameras have to be brought into perspective. If I need a new car, then I can't afford a 1Ds2.
Those who are not photography enthusiasts are amply served with a plethora of P&S digicams. Those who are
photography enthusiasts will gravitate towards the camera that produces the higher image quality. It's really quite simple.
Compare a 200/2.8 to a 300/2.8 for price (and weight), for example.
There's a weight advantage in this example that is offset by an image quality disadvantage. The smaller format generally has poorer performance at higher ISOs. The lenses need to be faster, not only to overcome higher noise but also diffraction. There's no ultimate advantage here except weight and there's an unavoidable, ultimate image quality disadvantage. Image quality usually takes precedence over weight, provided the wieght difference is not very significant, and sometimes even if it is significant.
The weight difference between my Sony DSC T1 and my 20D is actually very significant. I bought this extremely compact camera because I could carry it around everywhere. But I don't use it nearly as often as I anticipated because the ultimate image quality and noise factor is significantly worse than my 20D.
Presumably your prediction about the smaller DSLR formats (please, can we avoid the inaccurate and derogatory term "cropped format"?) needing "a full range of high quality EF-S lenses" only refers to Canon's EF-S mount DSLRs; the survivial of DX format, Four Thirds, etc. do not rely on EF-S lenses!
The term 'cropped format' is not derogatory but precisely meaningful and provides an indication as to why it will probably not survive. A 20D with an EF-S lens is an APS-C format. No cropping involved. However, a 20D with an EF lens is indisputably a cropped format.
Will the Nikon D2x continue the line? Probably not. 12MP on that size sensor is getting close to the useful limit. When the limit is reached and higher pixel count full frame cameras offering greater over all picture quality become available at a similar
price, even though slightly higher price, Nikon will be forced to go full frame.
Economics is about adapability and versatility. Rigid policies don't work.