The big thing everybody's missing is that this is a new invention. For every manufacturer. Smart watches didn't exist before a couple of years ago. MP3 players existed before the iPod, smartphones existed before the iPhone. The only product that comes close to the watch in terms of sheer newness is the iPad and even then there was a fair amount of collective sense that tablets were inevitable so there wasn't any pushback against it - particularly because it wasn't carry-on-the-street mobile.
The watch shouldn't be compared to any other apple product. Instead it should be compared to i; the first wristwatches and ii; the first mobile phones. Those are the last times customers were confronted with technology products that were "wearable" in the sense that there intended use was in public on the street and the user had to be brave enough to use one in public without looking like a knob.
So what do we know about the launches of those products? Wristwatches were a flop. It wasn't until war happened that they began to be seen as masculine and stylish. Mobiles? Very tepid start in the 1980s and 1990s, then a snowball effect occurred in the mid 1990s where culture changed to make it seem normal to use them in public so everyone could feel comfortable using them.
What does this mean for the watch? Its been a very easy start. They've sold millions. They're discreet enough that you don't have to make it blindingly obvious that you're using one in public and they look attractive to most people. We see 3-5 million sales now but the holidays are just around the corner and there are a lot of teens who already have an iPhone 6 to play with who'll be looking for a gift for Christmas. Once the teens adopt it, which they inevitably will, that will start that snowball effect. It'll be cemented as cool and people will be willing to give it a shot. Will it be the next iPhone? Absolutely not. If they can sell a continuous 20-30 million a year with users buying an average of 1.6 bands each then that's another $10 billion easy in revenue and yet another reason for those customers to stick with iPhone.
It mightn't change the world but I really can't foresee a future without smart watches and nobody else is capable of doing it better than Apple so the big question is what is the potential size of the market for smart watches in general, not what the potential size of the Apple watch market is.