While I agree that electronics will end up in lots of places, I doubt it will stop me from wearing a smartwatch. First of all, I'm certainly not getting electronics built into each of the forty or so odd shirts and sweaters that I own. Unless you think we are going to soon approach the sci-fi future where we all wear the same jump suit every day, I think there is almost no chance of integrated electronics into clothing done on a mass scale. At least not during the next 20 years or so. So electronic devices need to be modular so that I can wear them with my regular clothing. You can make cheap electronics, but that cheap stuff will have to compete with the three or four good pieces you own and use each day.
I could strap electronics to other parts of my body, but I doubt there are many places where it would be more comfortable than on my wrist. Computers are basically two things, a CPU and a display to get the info to the user. CPUs keep getting smaller and more powerful so off loading the processing to something more than just my smartphone seems unlikely to be necessary. But maybe. The wrist is the logical place for a display because I can bring it up to my eye. I can't strap a display to my ankle or around my shoulder and then see it. All my devices will talk to each other (they basically all already do), but there will be a limit to how many of them I carry.
I think we are going to be set with the combo of phone, watch and earpieces for a very long time. Maybe some sort of eyewear like Google Glasses will prove so useful that folks will wear something on their face. I'd guess that this is likely (augmented reality glasses), but still a really long way off as something tons of people wear daily. I'd guess that a second band/watch on your other wrist is also possible. I don't think it would be for more computing power than what I get through phone and watch. The CPU in phones is already really powerful. But maybe one band could be devoted solely to health monitoring (maybe even monitoring my blood on a periodic basis), it would have long battery life, and it wouldn't have a display since all info would go to my phone. Or maybe we wear a health strap somewhere less conspicuous taking periodic readings. But I think I will always want a miniature display on my wrist for glance notifications (though maybe the glasses will change that).
There's a lot of ground to cover between everyone wearing the same sci-fi jumpsuits, and you retro-fitting all forty of your shirts and sweaters. But I think you're underestimating where technology is today, much less what will be available over the next 20 years. I imagine sensors built into sports clothes at first, and then later it creeps into business clothes and casual clothing. And it's not going to happen all at once. Again, you asked where else it could possibly go, and I gave you a simple answer. Nobody will make you use that option. I on the other hand am no fan of wrist wear, except in dedicated situations. So no, I'm in no hurry to adopt that as my primary means of anything. I'd rather have sensors built into things I'm already wearing. But that's me. Here's another article that agrees with me and explains what's out there:
http://www.digitaltrends.com/wearables/smart-clothing-is-the-future-of-wearables/
I can't imagine why you'd even propose such ridiculous scenarios about having screens built into ankle devices, or on one's back, but that doesn't necessarily make the wrist the best place to put a screen, especially considering how small it must be. I also don't understand why you're discounting HUDs in eyeglasses, something billions of people wear everyday worldwide, and I would argue virtually everyone owns a pair of sunglasses already, even you. Such displays will be integrated inconspicuously in designer eyewear over the next 20 years, and provide far better display space if that's of value for some. As for my needs, I rarely use the watch display for any significant interaction -- it's just not big enough. So I pull out my phone. Without my phone, I'm getting more used to using Siri. As Siri gets better people will need the display less and less. Since I wear glasses, a HUD will always be the best option for me. But I can also imagine screens woven into clothing. Here's an article about that:
http://www.sciencealert.com/new-smart-threads-can-change-the-colour-of-your-clothes-instantly
But there's also rings, or buttons, just as effective as a tiny wrist display too, maybe even a flexible-display pocket designed into clothing, just like clothing manufacturers are making pockets bigger to hold ever larger phones. Or maybe the display-wallet for men, and the display-compact for women, things we carry whether we have our phones or not.
I get you're into the whole watch analogy, but we're on the verge of so much more. The rumors even suggest Apple hopes to make the watch fully autonomous, as early as this year, which means the end of the phone as we know it. Instead of carrying a phone the watch relies upon, you'll be carrying an optional display that relies on the watch. It's clear, you won't be the guy adopting this stuff, but there's a whole new generation ready to embrace it, who won't have a closet full of old clothes without smart tech, and will buy it embedded into new clothes they buy. Or in the new sunglasses frames they buy. Or in necklaces that become the next fashion trend. The smart watch is hardly more than a niche device at the moment. Apple has maybe sold 30 million Apple Watches between old and new customers, which is a tiny amount compared to the potential user base of almost a billion iPhone users. So there's a lot of room for other options to it.
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If he'd asked does it work without the iPhone but with wi-fi I would have said the same.
Not everyone lives and works on a campus or in the big city so you can't assume wi-fi access will always be there. I have none from the time I leave for work in the morning until I return home in the evening and I don't live or work out in the sticks.
But then you'd still be wrong
The correct answer from your perspective then, is that while wifi supports full functionality, it may not be available in your use case scenarios.
But forget my office campus, I've yet to be in a business or residence anywhere in the world that does not have wifi. I can't imagine how you don't have wifi available to you anywhere from the time you leave home until you return. That means you work in a place with no wifi anywhere, and you don't leave it once you arrive? Now, if what you're saying is you don't have access to wifi while you are working in order to stream music, then that's one thing, but certainly not the use case for everyone, even a majority of everyone I would think. I see employee wifi links in almost every business I visit, no matter how big or small.
But here's the thing, with most cellular plans, if I didn't have wifi, I'm not sure I'd be streaming music all day long over LTE on my phone either. So it's moot whether I could do it on the watch or not in that case. And Siri is only needed to adjust the volume (with respect to streaming), so again, the watch can be adjusted manually so this is also not a problem when playing back locally, which is the only way I would listen to music all day in an area where I didn't have access to wifi. Of course the battery will be the biggest limitation to listening to music all day at work anyway, so in a broader use case, we're back to yes the watch works perfectly anywhere it has access to wifi, user experience may vary.