How Will The Apple Watch Work In Apple's Refresh Cycle?
The iPhone design is generally replaced every second year (with an intermediate refresh after one year) which dovetails nicely into the network's preferred two year contract cycle. It means that customers are effectively buying their phones on credit and make repayments through their phone bills. As it isn't billed as credit most people don't see it as such.
The iPad is a one time purchase (although 4G models can be bought with a monthly plan as per the iPhone) and there is no driver to replace when it gets to two years old. In fact until Apple obsoletes it's older models by denying them access to new system upgrades there's no reason to replace them at all. The iPad's sales success has been tempered by this issue.
So what of the Apple watch? Although it launched with the iPhone and it will have to be an accessory to one, it's sales graph is much more likely to look like the iPad. Expect record sales at launch. I'm guessing that this might be Apple's biggest product launch ever, given that it will have built up several months of hype before consumers can actually get their
What happens two years after launch remains to be seen. Will Apple provide a significant enough upgrade to persuade users to buy another Watch, or will sales tail off as customers accept the functionality they already have?
I suspect that Apple will have three pretty good years of Apple Watch sales. Both the first iPhone and iPad sold well in spite of their problems, but the real take up occurred when the second generation ironed those foibles out. The same is likely to be true of the Apple Watch, although as with the iPad the rate of improvement will tail off sufficiently to cause sales to plateau.
To prevent this happening Apple could effectively make the purchase of an Apple Watch compulsory when buying an iPhone by bundling them in for a single package price. It would be an incredibly audacious move, but Apple fans are sufficiently loyal and Apple's brand sufficiently strong, that they could almost certainly pull it off.