Beautiful, but a niche product. I estimate that only 10% of the 250 million worldwide iPhone users will buy the Apple Watch. That’s approximately $8-$12 billion of revenue for Apple — not bad, but hardly the “breakthrough” or “new chapter” claimed from the Cupertino stage.

Why? 1) For many, two devices on the body are unnecessary. Pulling the iPhone out of a pocket or purse is fine — most will not need another device to access payments or track health. 2) What we wear is a deeply cultural and emotional choice. A watch, like a shirt, shoes, tattoo, skirt, jewelry, contains complex and carefully crafted information about the wearer — and these messages are continually massaged and warped by the often inexplicable forces of fashion. And no amount of “Milanese” and “buckle” luxury watchband talk can obscure this issue. 3) Wearing a radio directly on the body spooks many people who rationally or irrationally fear the health risks of close electromagnetic radiation. 4) It’s expensive — and not covered by carrier subsidies. It’s $600 for the whole package of a subsidized $200 iPhone and the $400 Watch. 5) The form factor has fixed limits — the small screen obviates advertising, electronics fatten the case, big fingers obscure the screen when touching. For many, the form will be seen as simply ugly. 6) Having to charge yet another device every day will be a bridge too far for many.

What It Means. 1) The limited installed base means that most large corporate CMOs and CIOs, with the possible exception of those in retail and financial services, won’t have to scramble to support the device. 2) It nudges the wearables space forward — Forrester’s research is showing nascent interest by consumers. 3) Samsung and Google get a break — without an Apple game change they are now free to innovate out in front of the incumbent.

Two years ago I wrote that without its charismatic founder, Apple would move from being a great company with high growth and high innovation to being a good company with moderate growth and attenuated innovation. After this week’s set of announcements, I stand by that analysis. Two big iPhones? They will sell very well, but the decision to make those devices could have been made in a 15 minute meeting. Payments? Promising but complex and riddled with conflicting interests and infrastructure. Apple Watch? As already proven in the marketplace by Samsung and Sony, the watch will appeal to a limited segment of Apple’s population (Ted Schadler at Forrester calls the Watch “BTG” — business-to-geek) but not to the majority of its customers. Apple remains a good company with the most complete and coherent software ecosystem. But it is now fast following, not leading.