Apple has to live in the real world. It's actually reassuring to me that they are able to consider these kinds of facts. It's certainly the job of Schiller and the marketing team to understand what the market is doing.

I agree with you that they need to design something great to serve the demand and not just follow others.

However, as an iPhone user, who loves the portability and one-handedness of the small form factor, I am using my phone for 'real work' all the time now, and would really like a larger screen for things like quip and mindnode. I think the demand for different tradeoffs is real.