^ I agree with your assessment, and if some how Apple can bridge the watch (timepiece), phone add-on accessory, fitness/health accessory, and ect into a device that everyone must have/need then they may have a hit.
They part I am struggling with is the must have/need concept. It took almost 20 yrs before the everyday person realize they need to have a computer in their home, it took the killer app before that happen which was the Internet. Everyone listens to music and there are plenty of things prior to the Ipod that said if you can do it better people will buy it. First it was phonoplayer (but only people with money could had them) then came radio, but then you had to listen to what they decided you should listen to , then records, 8 tracks, cassettes, CD, then MP3, but MP3 prior to ipod took an engineering degree to use. Mobile phones was an obvious thing, everyone had a phone in their house, and have used two way radios so why not a cell phone. it was not until they figure out how to make an inexpensive cell phone did it become popular. The iphone taped in to the a need first, then it was icon thing, after those who has lots of disposable income buy iphones, other people gave up buying other things like computers for the home just to have an iphone. Today the smart-phone and table is replacing the computer.
So the question stands what will the iwatch if it does exist, tap into, what thing will it replace or do better than what you already have. Today I walk around with a laptop for work, a cell phone, a watch on my wrist (since I am old school), I have my ipad, and my car keys and wallet. Today, I can not see replacing any of those things for something else. BTW, my watch is durable, I can bang it into things and it will not break, it is water proof, so it been in many feet of water and never have to worry about it, and I replace its battery once every three years so when I wake up in the morning it always has the correct time and never have to worry whether I remember to charge it last night. The same goes for my wallet, the CC always work and do not have to worry about my battery being dead after I just went out to dinner with the family, and forgot that I was on my phone all day and now died and can not pay my bill with my e-wallet.