I think if Apple had released this a few years ago then it'd be doing much better. It seems that they're doing a lot less proactive innovating and are now falling more and more into reactive thinking. I regularly work with two Apple engineers who are usually completely aglow about whatever the new tech is that's coming out and when I asked them about the watch there was a somewhat uncomfortable, "Oh yeah....that."
The problem is we've got devices that do most of this stuff for us. If I've got to keep a phone in my pocket to interact with my watch then what's the point of the watch? (And on a selfish side note, those watch faces need some work. Snoopy or GTFO.) I've got a Fitbit that shames me about my activity levels that I invested in when Apple didn't have a horse in that race, and why would I give up technology that I know and that works for the latest great shiny thing. But maybe therein lies the problem: Apple's still riding the wave of expecting people to get the latest greatest shiny thing even if it's not bringing anything new to the table and that model can't sustain itself forever.