The modern smartphone has little in common with the devices that were known as telephones until about 20 years ago, yet it has retained the name. It's not easy to predict something like this. (In the film Back to the Future II, the hero's 2015 house is filled with telefax receivers. There's a scene where his boss sends a fax to all of them and printed pages start pouring out. This is how people imagined the future of telephones a mere 30 years ago!)

The meaning of 'watch' as a timepiece may soon become as antiquated as the meaning of 'phone' as a fixed receiver on an analog landline.

That said, the word "watch" is likely a very good word to keep for the wrist-devices: their natural UX, given the limited possible set of affordances, is designed around passive alerts. Which is to say, they watch for events, and you watch them.

My recollection of history is a bit different. What I remember is that people were practically begging Apple to build a phone. You might say there was a half-hearted attempt with the ROKR, in partnership with Motorola, but it didn't really address what people were seeking. The calls for a phone done the "Apple way" continued. Now, I do believe Apple ended up greatly exceeding the expectations of the customers with the iPhone and, as you suggest, perhaps even created a new market segment because of that, but was hardly a surprise to see them announce something phone-like.

There's a part in this terrible move "Time Cop" (1994, set in 2004) where one of the characters uses this communications device that's a rectangular slab with a 2" or 3" bezel and is two or three inches deep, but has a touch screen. I thought, wow, this is what they thought an iPad would be, but what we have is actually better.

If they're gonna buy it it won't be on the merits of its watch functionality. So it's not about being a watch, in the same way (or actually far more so) than a smartphone is not about the phonecalls.

It's a machine you wear on your wrist that also happens to tell time.

Mind you, what the "younger crowd" wants is not really that predictable in the sense of "why would they buy a watch".

If it becomes a kind of fashion statement, they'd buy it, the same way hipsters now buy vests and hats (the kind of which people haven't really wore since 50 years or so), huge headphones (something that was a tiny market a decade or so ago, despite everything being available), etc.

It annoyed me how much they touted how incredibly precise it is. As if 50ms matters on a wristwatch.

They already are (along with any sort of wrist/hand jewelry) in many testing centers.