I don't disagree with you. We barely disagree. If you read my other posts (the popularity of this thread will make that hard, though) I outline similar points. It's called "Tehnology Adoption Lifecycle Model" and Apple's business model is in essence to take raw or early(ish) technology and repackage it to sell to an early majority market. But to do that they have to cross the chasm. And it takes a few iterations to do that. Especially because what consumers want doesn't always exist. Apple doesn't invent all technology. For example: Apple didn't invent the processor and they currently rely on Intel to innovate chip design for macs.
That's the long view model. But also, when they saturate and "peak" all they can do is hold on to market share in one arm, meanwhile develop and go into new product categories to create new streams of revenue.
And that's what Apple Watch is. and car. And so on.
Apple Watch sucks enough that even I didn't buy it. But that's the point I'm making: It's expected. They never saturate the market or develop the ideal anything until a few generations in.
Apple has to find early development and the supply chain, sell an early adopter version, make money, then fund the supply chain with sales from version 1, asking them, "Here's more money. Now help me make this better, faster, more effecifient." They do, and Apple comes back with Version 2. Then with profit, they return and continue the loop.
Version 1 is "just ok". Version 2 is "better." Version 3 is "great!" Version 4 is "Amazing! I have to have one." For this, see iPhone. I didn't buy until version 3G and it wasn't amazing until version 4. Of course everyone falls differently on that adoption line.
Again: do I think Apple Watch v1 is amazing? No. Proof: I didn't buy one.
Do I think Apple is following the pattern of tech adoption? Yes. Proof: Apple does this with every product.