Apple, in my opinion, is naturally doing everything it can to avoid harming higher price point and higher margin product sales. This is a phone meant for carriers to sell to those who otherwise wouldn't buy a nicer iPhone, not to help people save money. It was kind of doomed from the start.
iPhones have reached a point where the benefit of the latest/greatest is more marginal than it was say 5-10 years ago, so they have to play these tricks.
I'd say the weak sales of this product just reflect an active decision by Apple's leadership, and it may not be wrong from their perspective. As someone who would just prefer a cheaper, new, unlocked device from Apple at lower price points, I would have bought this myself if it was notably cheaper. I know they would have lost margin dollars in that though, and I think that's what they're actively avoiding.