Wearable computers are somewhat of a fad these days. It's hard to say if it will be a fad a year from now, but Apple is researching ways to capitalize on the trend it if happens to grow.
Reuters reports that Apple CEO Tim Cook hinted that wearable computers were on the tech giant's shortlist of new products this week during an All Things Digital conference. He didn't come right out and say that Apple was working on a smartwatch, but he did say that his company is working on "several more game changers."
So, what would an Apple-made wearable computer look like? It won't be anything like Google Glass or other wearable computers. He said "there's nothing that's going to convince a kid who has never worn glasses or a band or a watch to wear one." In other words, slapping a computer onto a watch isn't suddenly going to make somebody want to wear a watch. Cook said that "there's lots of things to solve in this space," so Apple is obviously researching how to make wearable computers cool.
That's always what Apple has done best - making nerdy things cool. You could argue that Google Glass is really cool, but then a bunch of pasty white nerds make it not so cool anymore. An Apple iWatch or whatever it's called would have to convince people that it's cool to wear something that's inherently nerdy on their person at all times.
Of course, there's always the possibility that Apple may just give up on its plans to release a wearable computer. It was impossible to make a calculator watch cool in the 80s, and it may be just as impossible to make smartwatches cool today.