Take the already popular fitness band market, incorporate those features into a watch and then make the watch do other things as well. It seems like a winning strategy to me.
We’ve already seen this play out with the marketing of the original iPhone as three devices in one. Apple pushed this even further with the App Store in 2008: “There’s an app for just about everything”.
At D12, Cook clearly implied that the iWatch was going to be a multifunctional device. He said “The ones that are doing more than one thing, there is nothing great out there”.