The reality of the situation is that there isn't nearly the demand for a full featured small phone that comes with the penalty of being a full featured (price) small phone (reduced battery capacity)
Agree - that’s a very reasonable conclusion based on the available data we have.
as the very vocal promoters made it out to be.
There are many different opinions about what a modern small iPhone should be, and that makes it a very challenging market to address. Some want it to be even smaller (iPhone5-sized), some want it larger (iPhone X/11Pro-sized). Some care about one-handed use, some don’t. Some care about camera specs, some don’t. Some want OLED, others expressly do not due to eye strain. Some want even more features (”But why didn’t they make a Mini Pro?”) while others want fewer (”They should have just put a ‘full screen‘ on the SE”’). Some want FaceID, others insist on TouchID. You can find all of these diverging wishes throughout this form and the internet at large.
Apple made a mistake... now it's course correcting.
Indeed. But the final answer hasn‘t been revealed yet. Apple currently has the lower end of the iPhone market split across two line-ups - the Mini and the SE. That is obviously a calculated, deliberate strategy, but there is a large gulf between the the two in both price and feature set. Maybe the key lies somewhere in between?
Most will agree that another SE is coming. Reports on the what it will be have fallen all over the map, including when it will arrive. But, if we speculate a March 2024 release (at the earliest) - two years from when today‘s model arrived - there is the possibility for the device to remain smaller than the yearly flagship range. It could do so by adopting the Mini form factor (or perhaps another of the smaller form factors I mention above). Specs, including the camera array, and potentially even the biometrics, could be adjusted to keep sufficient distance between it and the higher end devices.
Of course, it’s perhaps equally as likely that they do indeed go with the older XR/11 form factor which has been rumored. But, we’ve also heard that device has been delayed. So maybe they are rethinking the next SE given all the factors now at play with the Mini under performing in the market. If they do go with a 6.1” screen though, then it will be difficult to call the small iPhone anything but dead - at least for a couple generations, and probably longer.