I suppose you're right. But, just imagine the internal form factor to remain the same, thereby making it easier for a sort of trade in/upgrade program.
Of course, a business model requiring people buying new watches (much like they do now; regarding iDevices and to some degree PCs) does make more sense.
I just imagined it as a sort of way to lure people into some confidence, that their (potentially) four figure watch wouldn't be outdated or near useless within a half to an entire decade.
My laptop, runs just as good today as the day I bought it. It's an Early 2008 MPB (+ SSD). My phone (a 16 GB iPhone 4) still has some time left before it's passed on to my son (who is three years old) instead of buying him a brand new iPod Touch.
In that regard, I'm actually not a very good consumer. I use my tech until it breaks beyond repair or reason. I'm also not that interested in bling-bling or fashion statements - which also puts me outside the potential user base for the Apple Watch Edition. I could, however, imagine myself buying the Vanilla or Sport (TBH; they had me at the heart beat thingie).
On the other side, I do know some people who spend a lot of money on watches (Rolex, Tag Heuer and so on) an they are a different crowd entirely.
The Vanilla and Sport, have their own pretty - in my opinion - obvious target audience.
The Edition however, throws me off a bit. The 'easy' choice/reasoning would be to write the target audience off as being show-offs or that kind of thing.
But; what could be the reasoning for a 'typical show-off' to buy into what essentially is a piece of tech in gold? What does that do them good, other than being slightly more expensive?
It does sound a lot like, those hating on Apple users, for spending more than they should - just because of the Apple logo, finally have something to back them up.
But, like I said before. It was just a thought
EDIT: I do apologize for the typos. The combination of poor skills in writing in English and Danish auto correct on my iPad seems to be a recipe for disaster. I hope you'll forgive me.