I suggest that instead of evaluating things like the iPad or the Watch in terms of whether they’re the next iPhone, we evaluate them in terms of whether they defend the iPhone against being disrupted.

Go back to when the they gave the green light to the iPad. iPhones were small. Tablets were a thing, but not big. e-readers were a thing. Phablets were growing in markets like Asia.

What if everyone started buying tablets, and used bluetooth headsets to make calls? It seems unlikely that they would completely replace phones, but it could be that people start buying phones that are compatible with their tablets, and Apple would be frozen out.

So they brought out the iPad, and no, tablets didn’t replace phones, but Apple made some money and Tim Cook sleeps well at night.

Now I think it’s the same thing with watches. It seems unlikely, but one day we might find that all watches can make calls, and Amazon has one that uses voice to buy toilet paper or whatever, and what if people start buying phones that are compatible with their watch instead of watches compatible with their phones?

Apple doesn’t want to be frozen out of that game, so here’s a watch, and Apple is making some money, and if watches evolve to become huge, nobody is going to think of Apple has having “missed the boat.”

For the market leader, this is their primary imperative: Don't miss the boat. They don’t have to win in tablets or watches, they just have to make sure they are strong enough that if the phone business gets disrupted, they can compete. Or if the phones aren’t disrupted, at least make sure that nobody buys a Samsung because “Apple doesn’t make a tablet or watch that works well with an iPhone."