Comment by xenadu02
The number of people who aren't vocal tech people who actually want a smaller phone is a very small part of the market. In HN-like circles they're a notable minority but among the general population they are a smaller percentage. Especially when you consider huge segments of the market where your phone is your only computing device: a smaller phone is a massive anti-feature in large parts of the world.
Plus almost everyone who says they want a smaller phone will just buy a larger one anyway.
The sales numbers just don't justify it. Like people who pine for manual transmissions: they're vocal in car forums and publications but they're a tiny minority and making one is a money-loser even in the sports car segment.
Manual transmissions have no practical benefit aside from arguably being easier to repair. A better car analogy is pickup trucks (and cars in generally really) — they've gotten huge over the years, compact pickups have disappeared, and you hear the same arguments about it being a niche audience. The reality is that as soon as something sells well (big trucks in this case), these big corporations go all in on it and alienate large segments. Now 25 year old compact Tacomas are selling for as much as their MSRP and manufacturers (Toyota, Ford, Hyundai) are all scrambling to ship a compact. It's the same with small phones — the industry over-rotated on big phones and as soon as someone ships a good small phone, it'll be a hit and small phones will come back. iPhone Mini was a crippled device compared to the Pro line and it still sold millions. Google and Samsung haven't even tried to make something compact, let alone compact and good.