It used to be the only thing you could buy. Then they started making bigger phones. Now everyone buys those instead. They stopped making them because people stopped buying them, not the other way around.
Would you pay $1000 for one? Economy of scales matters...
Plus everyone who did look at them would say it is smaller it should cost less! Even though a smaller phone would be more technically challenging to build. Next you have compromises. No matter what you take out to make it work. People would bitch, I need that! I don't need this other thing! Next battery life, people complain about current battery life, you think they want less?
I could go on, but I can easily see why manufacturers don't want to deal...
I don't think it's the consumer market. It's more expensive to manufacture with physical controls, keyboards, and moving parts. It wasn't lack of consumer demand that killed the phono jack.
As a lover of small phones, unfortunately that's the truth. Apple tried a couple years ago with their iPhone mini and sold very few. Still, there should be enough of us that maybe some smaller phone manufacturers could fill this niche.
And maybr make it fully unlocked and repairable, replaceable battery, etc. while they're at it.
Either way 3% - 5% is a small number for Apple (or Samsung, or...) which might not justify making a small phone, but in absolute numbers, thats actually a lot of people! A smaller manufacturer should definitely be able to profitably fill this niche...