power usage of screens scales as O(n^2), but battery scales as O(n^3), meaning bigger phones will have better battery life
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They can just make them a little thicker, but still usable with one hand.
Really, it's not a technical problem, it's a marketing problem (i.e. not enough demand, unfortunately).
Ummm we did? My pixel 9 pro is noticably smaller than my pixel 6 pro, much to my delight. Maybe stop buying the XL tablet phones and you'll find they're actually a reasonable size again. So many people in the comments rallying against an issue that isn't even there. You're just being told this is an issue. Do you even check for yourselves?
The "small" P9P is considerably larger than the iPhone 12/13 mini, which is the size OP wants. My mother-in-law has an iPhone 13 mini and it's very small, but nearly as fully-featured as the standard iPhone 13, which is where other manufacturers keep missing the mark.
I'd like to have no phone at all, I don't like small screens, nor being interrupted. Problem is that phone apps are now almost obligatory for IDs, transport tickets, passes, banking, etc. So I'd just like a phone-receiver (modem) with a sim card on a USB stick that can enable phone-app-stuff via my laptop or tablet. (Yes some tablets have data sim cards, but we still need sms and occasional phone functions for 'verification' etc.). Any suggestions?
Making a small phone is harder than making a big phone.