I'm not sure what market research inspired the phone, but there's probably a segment of people where pretty severe constraints are considered a positive, primarily to reduce device usage, either as your only device or a device you just use in certain contexts.

I don't want the temptation of the web and apps when I'm getting ready to go to sleep, but I do want basic functions like phone, controlling my lights and music, etc. For this use case, the candybar form factor is excellent.