Tim Cook and Johnny Ive may present the Apple Watch as an incredibly novel, sexy-as-hell product in a nascent, high-value market, but they do that with every new Apple product line because it’s their job. They know very well that the Apple Watch will not see iPhone-like, extreme revenue generation.
Apple Watch was not designed to be a high-growth, standalone product. It was designed to be a companion to the iPhone. As such, Apple Watch success will be a direct function of iPhone success. As long as the iPhone continues to sell in mind-boggling quantities with a mind-boggling growth rate, the Apple Watch will enjoy a growing market as a complementary product with recurring revenues every 2 years or so, in line with the iPhone.
While sales of the iPhone and the Apple Watch will not match up 1:1, the ratio will still be high enough for Apple to make a decently profitable side business out of selling watches to a growing subset of consumers who will find some set of tenuous and borderline-indescribable reasons to purchase one. [1]
[1] http://roymurdock.com/essays/2015/07/apple-watch-form-factor...