The iwatch will not be a watch. Think iPod touch.
Iwatch: rumor name to make it simple. Rumor is Apple making a smart watch, a wearable computer, a wearable companion to the iOS ecosystem.
It will be a new line of product that does not exist yet. One of the functions will be to display the time. But only one of many. It will go beyond the watch market but it will replace the watches for many people. I am convinced that it will not be marketed as a watch. Apple has no interest to gain by going directly against the traditional watch industry.
Want an example? Look at the iPod touch. It has never been exhibited as a portable gaming console... until it became the best selling portable console de facto. Indeed one of its functions was to play games. At that time Apple had no interest and strenghts in confronting the leaders of the gaming market.
The iwatch will define a brand new market (with another name by the way) that will be obvious to everybody's eyes in 5 years. Watch makers don't see it coming. They will have to face the biggest challenge they may have seen.