Ex-Lead UI developer from the ex-Microsoft Band here.
UX wise, rectangular and square form factors make a lot more sense for the types of media consumption smartwatches are used for. Every time I see a text message clipped on the sides with only 3 lines showing on a huge circular display, I cry a little inside.
Apple went with square-ish for a lot of good reasons.
You can do some cool, innovative, and impressive looking things with circular form factors of course, especially when it comes to graphical displays of data. But humans are very bad at judging magnitudes in pie shape forms, and at the end of the day, a lot of information is textual. This limits you.
> My wife thinks that even the smallest latest Apple Watch is way too large for a watch.
Honestly the Microsoft Band being worn on the underside of the wrist was brilliant (I may be biased). It is much easier to hold up in a comfortable reading position, and the dual body design meant the mass was split across the top and bottoms of the wrist.
The problem of course was fitting all those electronics in a much narrower form factor. The entire device ended up being too wide for some people's wrists. At the end of the day, all those electronics and sensors, and of course the display, had to go somewhere.
In regards to the article, I'm guessing Google is buying a team for the factory contracts, supply chains, and perhaps the ME/EE talent. Having all of that come in one big package is nice, building up those supplier relationships especially can take years of painful miscommunication.