Why I don't think Apple will do a watch
Everyone seems to be anticipating an "iWatch" but I don't see Apple doing one for a couple reasons.
First, how many people wear watches these days, especially young people? Where is the market for it outside of tech geeks? I expect Apple to do something less predictable than a watch.
Second, Apple is a company that typically designs things they would want to use themselves. How would/could Apple design a watch that would come close to the type of watches Apple executives wear? I don't know if Tim Cook wears a watch (we know he wears a Fuelband), but Jony Ive wears Jaeger Lecoultre which sells for $10K+. How does Ive design something that looks like a fine piece of jewelry and sell it for, say, under $300?
Third, from what I've seen of the Google Wear smartwatch prototypes it's definitely function following form. Every one drooling over these prototypes are doing so because they look like a traditional watch. It's more about the aesthetic look than functionality. The approach I expect Apple to take is first deciding how they want their device to function, what features they want it to have and then deciding what form/shape it should take. And I wouldn't be surprised if that doesn't look like a traditional watch. Of course when it comes to wearables style is very important but to get people to part with their hard earned dollars it needs to be functional, not just look good.