This is equivalent to something I called the "QWERTY paradox" more than a decade ago:
Back when the Smartphone market exploded, people disliked typing on a touchscreen and repeatedly stated that they want a device with a physical keyboard.
There was plenty of evidence, surveys, market studies, trend predictions, devices for these "Messaging-centric" use-cases were always part of this market-demand roster.
But whenever someone answered the call and built a Smartphone with QWERTY keyboard, the product failed commercially, simply because also to people claiming they want such a phone, at the point of sale they were less attractive than their slimmer, lighter, all-screen counterparts.
Every major vendor went through this cycle of learning that lesson, usually with an iteration like "it needs to be a premium high-spec device" --> (didn't sell) --> "ah, it should be mass-market" --> (also didn't sell).
You can find this journey for every vendor. Samsung, LG, HTC, Motorola, Sony.
The same lessons were already learnt for small-screen devices: There was a "Mini" series of Samsung Galaxy, LG G-series, HTC One, Sony Xperia. It didn't sell, the numbers showed that it didn't attract additional customers, at best it only fragmented the existing customer-base.
Source: I work in that industry for a long time now
The paying market for larger phones also contains the potential market for smaller phones.
There is no ADDITIONAL market in selling smaller phones, and not enough free market to make users switch brand for a smaller phone. So there is nothing to gain.
Crucially, even if 10% of the iPhone users want a smaller phone, they won't buy a smaller phone unless it's compatible to the iOS ecosystem. So roughly half of the market can only be effectively converted by Apple and for Apple it turned out to be not profitable enough to convert them.