I think the people who replaced their watches with their phones are fogeys like me. I was a late adopter of cell phones and I've had one for 12 years now. Extrapolate that to 18-25 year olds and you're talking about kids that pretty much got cell phones as soon as their parents would let them have them - they've never really been "watch" people. If they're looking at fogeys like me, they're dealing with people who have already lost their Fitbit, already let their Twitter feed die, and have already Friended their entire high school class on Facebook and whose wives are gonna get sick of having crudely-scrawled hearts "messaged" to them about half an hour into the adventure. Ergo, fogeys like me aren't their market. Or if they are, they've misjudged it worse than the two-key mouse.
This saddens me because watches have more aesthetic viability than phones ever will, tbh. That's 1/2 the reason I have that pocketwatch - it's cool looking, in a way that I don't think phones are. All those little parts moving together. And you can see them all! And it could last multiple generations, if I take good care of it. Can't say the same for the phone market. they've never really been "watch" people.
My wife tried to buy me a pocketwatch. She bought her first husband one. I appreciate them as fetish objects but they lack the utility I need in my life. That's something about the iWatch- I need to be able to tell time, with polarized sunglasses on, in broad daylight. "Hands" have an advantage there.