That's the problem with the Apple Watch right there: Eventually, there will be a next generation, and eventually, Apple will drop the soft- and hardware support for the watch and it will become an obsolete device that will be incompatible to the other device that it needs to function - the phone.
Can anybody imagine this to happen to a real watch like a Tag Heuer, a Rolex, a Cartier? Those watches were made to last throughout the life times of generations of owners. The Apple Watch probably won't even last three years until it becomes totally out-dated and useless. And there is no phone contract accompanying this thing to subsidize it, so this is going to be a very expensive lesson for their owners.
People replace their (subsidized) phones every two years - that's something most people squeeze into their cash flow. But spending hundreds or even thousands of bucks every two or three years on a new gadget watch that has no solid, lasting value? I don't think that's gonna fly on the long run.
For the price of certain Apple Watch combinations one could also buy a (rather low-end) Rolex Submariner, for example - which is a watch that won't lose any of its values for DECADES to come, because it simply has real value and just won't become obsolete or will stop functioning because its battery is dead and cannot be replaced anymore or because its software is no longer compatible to current smartphones.
Real value (as in value of materials) and longevity are serious problems for Apple in this niche. The people who usually spend that amount of money on watches probably look at Apple's watch and immediately associate it with plastic toys coming from a chewing gum vending machine. It's a bit like trying to sell jewelry made of gorilla glass to a person that's used to buying diamonds. Good luck with that.