....I do not believe it will replace watches. It will be a new product category, and I imagine it will require an iPhone to achieve full functionality.
So the margins analysis is, to my mind. erroneous.
Completely agree. A watch:
1) is worn on the wrist
2) tells time
This will qualify, but that would presumably be the least of it. If as a developer, I can coordinate with an iPhone app, this would be very intriguing. For example, an app to capture statistics for sports activities. If it can integrate that to this device, it could be very useful. As a coach, timing sprints would be very handy. Waterproof would be great so I don't ruin my phone, etc.
Siri integration also comes to mind. Currently people will think it odd to talk to your wrist, but 6 months after a Siri wristband ships people may not. Or our kids may not... maybe it'll take a while. To imagine that our current modes of human-computer interaction aren't about to undergo a paradigm shift is missing the boat at this juncture.
Wearable computing is looking to be the next big thing and right now Apple is in a great position to excel. I'm very excited to see what they come up with in this category. And god, I hope it isn't called iWatch. I'd be very surprised if it is though. Watch is the least of it.