Rumor has it that Apple is developing a smartwatch. People might already be using devices like the Pebble Smartwatch, which is a pretty attractive, oversized watch.
Specialty high-tech watches have come and gone over the years, including the Fossil watch that was actually an entire Palm Pilot in a small form factor. Microsoft also had an interesting watch that synchronized with various services but died before long due to neglect. Despite the many initiatives, none of the devices were runaway hits.
Most of these stemmed from the original idea, a Dick Tracy phone/watch that one could talk into as if it were a diminutive speaker phone. This is what Apple will do, if it does anything.
In Asia, numerous such phones are being developed and many have already come to market, though they lack style and marketing. But a search for the keywords "watch phone China" will yield dozens of hits, like this $94 i5 Watch Phone Quad Band Single SIM with Touch Screen FM Java that even runs apps.
These things are cropping up in droves yet no American sales channel has appeared to move them in quantity. There is no doubt Apple could make an iOS version and sell millions of units. I'd expect the exact same thing from Microsoft. In fact, if I ran the company, I'd get Windows Phone 8 on one of these things ASAP, if it is not already in the process of doing so, and beat Apple to an announcement. I also would not be surprised if such a device was announced at Google's next developer's conference.
The key to success with these new smartwatches is Bluetooth. You do not need a large and often clunky smartphone if you use Bluetooth, especially in almost all of today's automobiles. Anyone with any brains in the automotive game has cars equipped with Bluetooth for the sole purpose of linking the mobile phone to the car audio system. These systems receive calls, make calls by voice dialing, and seamlessly silence the radio or music systems in the process. I don't see why similar base stations cannot be in places like the home.
While not every computer has Bluetooth capability, it's easy to add. The camera- and microphone-equipped laptop or desktop machine could therefore also become the proxy for the little smartwatch at the office or at home. In fact, with Google Voice, you can probably route everything through a landline if you wanted to use it without actually talking at it.
So the infrastructure is already laid out there for the Dick Tracy watch and designs for these phones are already being sold by dozens of Chinese vendors. I assume Apple is not really designing this phone, but picking one from a catalog and tweaking it to make it fit into the Apple aesthetic.
The big question is when Apple will decide to roll out this watch phone. I would suggest sooner than later because Google, Microsoft, and maybe even Samsung, HTC, Motorola, and Nokia must also be working on their own devices.