Oh, there is market for this. I personally have a iBasso DX90. If you think this is expensive, look up the AK 240 by a now rebranded iRiver.
I have never used my smart phone as a media player, I just don't want to. There is not enough storage and I strangely want to make sure my phone has enough power to make phone calls and playing music will impact this. To each their own here.
If I had the extra funds, I would have an AK 120II in a heartbeat, I just cannot justify $1200. It's on par with this offering, wifi, Bluetooth, Android, touch screen, etc. Sony's previous offering was still a bit steep at around $600 and with no SD card slot so you were locked into the on-board storage. At least they finally added the SD slot (every other player manufacturer has one, sometimes two see the Fiio X5). If Sony used their size and lowered the price to $300-$400, they would kill Fiio and iBasso and even AK assuming the quality was there.
Honestly, I would have been happy if Apple had increased the storage, or added a SD slot with the Nano. I loved that little thing. Small, light, good battery, just crap for space considering it maxes at 16GB and about 1-2GB of that is the OS and file system overhead. But then I found the DX90 and went that direction. I could have gone with a SanDisk and flashed the firmware with RockBock, and probably should have. But I'm very happy with the DX90 (except for battery life, but I can deal with that) and frankly, that's all that matters here.