Why does everyone think that iWatch will cost a few hundred dollars?

Samsung released their galaxy gear watch, and it cost $299. Everyone scoffed "that is way too expensive!" Analysts are suggesting an Apple iWatch needs to be a lower cost, iPod-priced device. I just saw a report that suggests an iWatch will cost between $149-229.

Why is it so important that Apple hits such a low price point? I would MUCH rather Apple focus on delivering the most amazing, mind blowing wearable iOS device that they could possibly deliver. Add a large high res OLED flexible screen, every sensor imaginable, better battery tech, and every radio antena, camera and microphone that they can cram in there!

Top it off with Jony Ive's stunning minimalistic industrial design and I will happily pay top dollar for that device. I can easily see a device like that costing between $400-600, with teirs based on internal storage.

Why is it so important that this device be cheap? Which would imply limited functionality. If Apple just make some sort of fitbit or nike fuelband competitor, I wil gave no interest! i think a "watch" like this could be the first really good use case for a flexible OLED screen. The screen could wrap around your wrist, and be maybe 2/3 the size of an iPhone. This would cost mucho dinero!