Even the small phone user base is probably fragmented between people who want a lower cost phone and people like me that want the Pro or better, just smaller.
Apple already has the SE for the low cost market. They have positioned the mini as the mid-range. What they're missing is a high-end small phone. I'd happily pay for it.
The current SE isn't a small phone; it's a previous-era-of-design phone. It's a phone from before phones gave you as much screen as would fit on the front face of the body. If you want that, you can just buy any new-old-stock phone from 5 years ago; they're all cheap, they're all that size, and they're all (IMHO) painful to read or watch anything on.
A low-cost small phone would be the opposite of the SE: not good-specs, bad-screen; but rather all-screen, bad-specs. An iPhone Mini minus-minus.
Agreed, I think this is not only for the reason of cheap manufacturing (I doubt it's a lot cheaper than just reusing the iPhone XR case). I think it's just a conscious disincentivisation (word?) from Apple to avoid cannibalising their mainline models :) I'm surprised it's so popular, because I really don't miss the bezel. All-screen phones are a great advancement.
If I had an iPhone I would seriously miss the fingerprint scanner but this is not an issue on Android, the in-screen option works amazingly well.
