I think what they mean is, the datacenters actually running Watson would consume too much power. A mobile app with millions of users would require many many instances of Watson running, so 10 racks of servers per instance doesn't sound feasible.
"Even though most of the computations occur at the data center, a Watson smartphone application would still consume too much power for it to be practical today."
They need to optimize Watson server side for it to become commercially.
p.s.: I for one welcome our new Blue Overlord.