No, they aren't going to. Here's why.
The people buying an Apple watch.. they weren't ever the target for a Rolex, or Panerai, AP or Patek Philippe. Not even TAG. The price points are so far apart, they're not even the same market. You don't buy one of those watches simply to tell time. You're buying a legacy, and possibly an heirloom item that you'll enjoy for the rest of your life, and then pass on. When you own a quality timepiece, they recommend you have it serviced every 4-5 years. That's a service on the inside and out, but many people grow to appreciate the patina the watch has earned. Scratches that one might have normally considered unsightly now become memories. A lot of people ask that that be left alone. That's never going to happen with the Apple Watch, because it's not meant to be kept forever. It'll last a few years (maybe) and then it's time for a new one.
You also say incumbent as if Apple has entered the luxury market, and they absolutely haven't. And you're the one in denial if you think they have. Spending $500-1000 on a watch isn't luxury. If Apple's going to cut into anyone's profits, it's going to be likes of Fossil, etc. Otherwise, they're defining a new market that isn't in any way at all at odds with the market for luxury timepieces.
For some reason that hurts fanboys. I don't know why, but they'd better start dealing with it.