As a low risk way to assess the real impact. It was low margin as others have pointed out. To remove it will have minor revenue impact, and by doing it at same time as launching new phones they are testing to see if this is the time that will force/cajole/motivate the 5/SE users to finally 'let go' (of the form factor or their money) and go up to the XR.

The announcement is basically telling those users (and there are millions of them!) that it is time for a change.

The decision is good business sense. And given they often announce products in Q2 as well they will have data of demand for new phones, and also how many have exited the Apple ecosystem due to price, and then in March they should be able to decide whether or not in best interests to release an SE2 or bring back the SE1.

As to margin above it should also be pointed out that the components in the SE are now aged. To do the same again, and take latest components and stuff into a smaller form factor will take a major engineering effort as new components and usage is for a larger cavity inside. To take all those and stuff them into a smaller space is actually like inventing a whole new phone - one literally has to rethink the physics of everything. Big investment.

Also if they continue to sell the SE it means they and suppliers must continue to produce the components and parts. And for much of this that means factories worldwide, including here in mainland China where i live, need to keep running nearly obsolete processes, equipment, and that wont be viewed well by their investors unless it is a cash-cow.

This is done for business reasons. When a company gets bigger than most global trading blocs the decisions they make have enormous global trade implications from the mine to mainstreet.

App developers already started abandoning the platform over a year ago. Sure the app would work, but usability keeps getting worse. 80% of people use their phone as their primary computing device. Within the 20% are niche markets and some are not price conscious at all. Eventually someone will figure that out.