I agree that the problem is "enough utility", as not all the industry is dead: there are some niches where it is very much alive.
Among runners and cyclists, Garmin dominates. (I estimate that would make up 25% of my social circle.) I would use my Apple Watch for fitness and outdoor activities far more often if the software/apps were better, as the hardware potential is just sitting there untapped.
The other utility I find valuable in it is in notifications and call handoff, along with some utilities like stopwatch, timer and calculator. But these latter utilities have been available in electronic watches long before "smart" watches. And I would use Apple Pay every day if the stupid Australian banks supported it!
IMHO the failure in smartwatches is that there's no killer app for the mass market, no actual problem that they solve.
The tech simply isn't there. Smartwatches don't have enough utility compared to the downsides of constant charging, and are much too power hungry for automatic or mobile charging (though wireless charging probably gave these devices a slight bump).
Battery life is very much the chief complaint, followed by weight (which, of course, ties right back to battery life). The smarter you want to make a device, the more power it needs, and the more of a battery it needs. Even your ATmegas are going to struggle - we're simply just not there yet.
I suspect it'll be another case of the Newton - it's cool, way ahead of its time tech. Give it ten years and we'll be way closer to making something truly useful with it.