Samsung are positioning the Alpha very much as a flagship device and pricing it in the same region as the S and Note devices.
The plan seems to have the S series for people who want the very cutting edge in specs, The Alpha series for people who want a compact high end phone with sleek design and the Note series for people who want a phablet styled device. Three different devices for three different audiences, but all are flagship devices in their respective segments.
I'd wager that shoppers who would like a smaller phone would still by the latest giant Samsung flagship phone over the Alpha because of this effect.