Smartphones are expensive to own and operate, particularly if you also pay cellular connectivity on a tablet, broadband Internet and cable TV. If the iWatch requires a monthly fee, it will be a lot less appealing.
2. Battery Life
Smartphones tend to devour battery power. An Apple iWatch wouldn't have to deal with the power demands of gaming apps, but it would be pressed for power to deal with constant network activity. If the iWatch has to be recharged frequently, it will be more burden than benefit. Inductive charging could help, but really you don't want to have to remove your watch to charge it.
3. Sensors Don't Matter
There's much talk about how ubiquitous sensors will bring on the Internet of Things and change the world. For some things, like road sensors, traffic and automatic cars, that's probably true. Sensors are particularly valuable when data is aggregated on a mass scale. However, sensors that provide personal analytics are overrated. Some people no doubt appreciate knowing how far they've walked and how many calories they've eaten. They could also have paid attention to how long they've been walking and what they put in their mouths. There's data all around us if we care to see it and think about it. You don't need an iWatch to make good personal decisions about exercise and diet.
4. Everything Watches Can Do, Phones Can Do Better
Experience the limited input capabilities of the iWatch today: Use your iPhone without using the virtual keyboard. That will mean a lot of interaction with Siri, Apple's voice-driven personal assistant. iWatch apps won't be able to do much with so little screen space and limited touch input. Someday, Siri may turn out to be the preferred way to interact with one's iPhone. But that's not the case today.
5. Notifications Are The New Spam
If you only receive a few notifications through your smartphone and other devices, then you probably appreciate notifications but don't really require them. After all, with only a few of them, you can check your calendar periodically and rely on memory, notes and other reminders. If you receive a lot of notifications, you've probably started to tune them out. Chances are you'd be better off with better information filtering than an iWatch that offers another channel for notifications.
6. NFC Isn't A Point of Differentiation
The iWatch has potential for near-field communications (NFC) applications, like contactless payments. But Apple doesn't add any value to NFC, at least not at this point. NFC is a standard protocol. There's no reason an Apple iWatch with NFC would be any better as a means of electronic payment than, say, a Google Nexus 4. When the iPhone debuted, it was better than any other smartphone. Specifically, its touch interface and digital commerce ecosystem were better than the competition. It seems unlikely that Apple will be able to reinvent the watch in a way that matches its reinvention of the mobile phone.
The real market for an iWatch might be overseas, in places like China and in the developing world where there's greater price sensitivity. The iWatch might be redundant for iPhone owners but it might work as an alternative to a smartphone. It could be an entry point to bring new customers into Apple's ecosystem, in the hope they'd later upgrade to other iOS devices. But given that Apple sells its iPod Nano for $149, it's not immediately clear that the company could sell the iWatch at a price point that's low enough. If Apple could do it for $49, it would be a huge hit. But the company has shown little interest in selling low-margin items.