YES, the market is big enough, but obviously the watch hasn't been as successful as Apple thought it would be (per various articles online), so why not start to get in on it? Isn't this the same discussion with Android vs iOS (the smartphone market is big enough for both)? Then why continue to ask for features that are available on androids that weren't originally on iOS (i.e.: widgets, notification center, etc)?
Many people carry their phones for safety and I get that. However, there are thousands of schools in the nation, MOST schools have cross country or track programs, and I'm sure in these programs are kids who have a GPS watch and would have hopped on the apple watch right away instead of the Nike or Garmin watch if it had GPS just for the simple reason that it would cover two desires (smart watch and GPS watch). I would have in a heartbeat....would have been at the apple store 3 hours away from my house for one on release day. But then Garmin came out with a more affordable version of their smart watch (I'm a Garmin guy) and I bought that instead, because it did everything I "needed" although I would have loved some of the other features of the Apple watch. That's one customer...and I'm sure I'm not alone.
By not adding GPS the market is in thirds: GPS smart watches, Android smart watches (do they have GPS???), and Apple Watch. Why not cut that in half (or close to it) and make it all about your mobile device preference?