My guess is that Apple's trying to fit too many contradictory needs with one device, and the device isn't able to fill any of those needs at a price point that's attractive to make mass adoption happen.
Me, all I wanted was notifications and time. I'd pay $150 for an Apple product that did that well. But that maxes me out. I wonder if they'd updated that old iPod Nano, what would have happened, eh?
Some people want activity monitors; but there are good activity monitors out there for far less than the Apple watch.
Apps... Is it REALLY worth $300+ to check your wrist for that stock quote, rather than pulling out the phone?
I wish Apple had tiered the product. Level 1: bracelet like the Vivosmart with notifications and time; level 2: bracelet with notifications, time, and activity/pulse monitor (same form factor); level 3: the Apple Watch
An Apple device that matched the Vivosmart at a similar price might have sold like hotcakes; I'd have bought one. They could have offered plastic, alumin(i)um, and gold versions.