Why do people not celebrate Hanukkah?

"Instead" implies that one thing is replacing another or that the two are corollaries of one-another. This is not the case. Jews celebrate Hanukkah contemporaneously with Christmas, but these holidays are different in celebration, meaning, and purpose. They have nothing in common other than that they are both in December.

Religious Jews ignore Christmas; it is simply not something of any importance to them in much the same way that Christians ignore Hanukkah, Eid al-Adha, or Diwali (which are Jewish, Islamic, and Hindu holidays) because they are not relevant to their tradition. Jews hold that their savior is not yet born, so it would be improper to celebrate the birth of a false Messianic Candidate.