Maybe we're missing the boat here. Story is, while Steve was terminally ill he spent his time in hospital conceptualizing better medical devices, etc.. It could be the iWatch is a red herring. Apple could be starting off into innovative medical devices. It's a massive industry. The technology & interfaces they use are comparatively medieval. A good industry to disrupt.
VERY good point. I've speculated that the whole iWatch thing was a ploy to get Samsung et.al. to dump lots of cash into something that will fail and cost them a bundle. It's very logical that they would also use it as a smokescreen for development. Then while the rest are trying to make a go of it selling feature watches to a public that will for the most part be unimpressed, Apple will drop something out of left field that will surprise everyone.