By all accounts, and apart from those who use the device as a statement of fashion or wealth, the wristwatch ought to be dead at this point. In its most basic form, all the thing does is tell the time. With the advent of the smartphone, such single-function devices should be passé. I still own a number of watches, although I use only one on an irregular basis: a Casio that's solar-powered, atomic-clock synchronized, and very easy to reset as one changes time zones, as I do frequently. I use the alarm function when I travel. It cost about US$60, so it's a bargain. And I don't usually wear it, as my handset handles all time functions, and a lot more. Why carry two devices when one will do?
Why? Because the convenience of the wristwatch form factor is undeniable. And, despite the small screen real-estate, there's a good deal that can be done with the wristwatch model. In fact, once again, should Apple intend to pursue this space, they'll be a follower, not a leader. Just do a search for "smartwatch" (go ahead; I'll wait) and marvel at how much technology already exists here. But note also how smartwatches have been notoriously unsuccessful in the market so far; I don't own one, and I don't know anyone who does. My experiments with them have been quite unsatisfying, again given the small screen area and especially the limited user interfaces. So, it would appear that convenience and inconvenience cancel one another out in this case.
But what if we think of the watch as a peripheral to the handset, rather than trying to make the former a standalone device? Connect the two via Bluetooth. Cache important data, (discretely) report alerts and alarms, run apps (think of the possibilities), and eliminate the need to commit the social faux pas of glancing at one's smartphone when one's watch is discretely at the ready?
Doesn't sound like a bad opportunity at all, then, does it? A smartwatch (or, rather, line of smartwatches; remember, there's fashion at work here) could be a terrific line extension for Apple. And there's no reason why we wouldn't see the same for Android or any other mobile operating environment, or even a cloud-connected smartwatch (think "Google Watch") programmed via any browser-based device. Given the possibilities here, I can easily see replacing the Casio in the not too distant future.