Why don't Android OEMs try to compete with the iPod touch?

How come after all these years, there is no viable alternative to the iPod touch. It is like manufacturers have completely given up on trying to compete with the iPod touch. Is there really no market for an Android device that does everything except make phone calls? I'd think that such a device in a HTC One/ Galaxy S4 form factor would make a compelling device. Would be a great smallish tablet like device for people that don't want to carry around a full fledged 7" tablet. Thoughts?