I took off a TAG when I received my Apple Watch, both watches are stainless steel with a sapphire crystal. Both sell for around the same price. I'd say those are good indicators that they are competing in the same space.
It remains to be seen how timeless an Apple Watch will be, but while most of the features do require an iPhone, the watch does as much, if not more, than most watches even without an iPhone (alarms, timers, stop watch).
I do expect the Apple Watch to do more without an iPhone (either through updates, or future versions), but I do not see them cutting the price. They may build value by offering an upgrade path by at least supporting bands for multiple generations or by offering an upgrade program (pay $500 to have your gold edition watch updated to the latest screen/chip/battery).
I'm interested in what you deem a huge success. I love my Apple Watch and already couldn't imagine going back to a time without it, so that is a huge success in my book. I noticed the same interest in the watch the last time I went to the Apple store and assume it's because you can't even buy them in the store yet. To me, the only way that Apple Watch will be a failure, is if Apple stops making it. Because then I'll eventually have to go without as a future phone won't support it.
IMHO, the success of the Apple Watch will be decided by the second or third generation model. At the end of the day, Apple faces the same issues the original iPhone had, but we'll see if they can figure out the Watch's big feature.