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All that manufacturing precision and it's not fully waterproof. Come on, Apple.
It isn't a dive watch - the touch screen wouldn't work under water - so regular water resistance is fine (and industry standard).

It's safe to be worn in the shower, that's enough for most people.

Edit: having looked into it a little more (not very knowledgeable about waterproofing, I dislike dive watches), there's no such thing as a "waterproof" watch, just a watch that is resistant to water at certain levels of water pressure. Information about it here: http://en.wikipedia.org/wiki/Water_Resistant_mark

Indeed, engineering is about tradeoffs.
No, "industry standard" for sport watches is 50-100 meter depth.[1] All Casio's sport watches can handle that. Rolexes are generally good to 100 meters. Apple's watch can't handle a shower, let alone a bathtub.

There are touch screens that work when wet.[2]

[1] http://www.casio.com/products/Watches/Sports/ [2] https://www.youtube.com/watch?v=mVPku-xItv8

Apple Watch has a water resistance of IPX7, that's the same as a Garmin, for example. It is fine in a shower. There's no point comparing it to other sport watches because unlike the Apple Watch, they can actually be used under water. A smart watch (at least one with a capacitive touch screen) cannot. Why make trade-offs (e.g. making it bulkier, perhaps) when there's no benefit?

Addressing your second point, there certainly are touch screens that work whilst wet - however I suspect there will be significant draw-backs, such as responsiveness, colour clarity, etc. Again, I don't have the details but if Apple could make Apple Watch usable underwater without any compromise, I'm sure they would have.

However, it would have been interesting if they had released the "Sport" model as a bulkier, water-proof version, leaving the regular Apple Watch as the dress watch. There certainly could be interesting applications for divers, etc.

Edit: check out this review of the CAT phone you linked. http://www.cnet.com/uk/products/cat-b15/

"Very poor screen" and "The screen has been designed to operate when wet, too. You can't use it underwater, but it's fully functional when covered in flecks of water". As subnaught says, it's all about trade-offs.

You can't use typical sport watch underwater either -- the instructions say not to press any of the buttons.
Watch depths on watches are basically lies. Look at the "Water Resistance Classification" table in the linked "Water Resistance Mark" Wikipedia page. 50m means you can barely submerge it. 100m is snorkeling.

I learned this the hard way when I got a new 30m watch for a sailing trip and it died the first time I stuck my hand in water. Timex even used to print something like that table in the paper that came with the watch. So I'll upgrade my "lies" characterization to "shameless lies".

(That said, I want Apple to do better, and I expect they will in the future. Underperforming on the first products would be a disaster. Better to under promise.)

It means that in a sealed water resistance test thing, the watch, sitting there surrounded by water, will still function when subjected to, in the case of your watch, 3bar of pressure. That is without moving the watch, with the crown fully tightened/pushed in, etc. Yours was probably defective, or was advertised in bad faith, even though by those water resistance tables they say 30m isn't suitable for swimming. However, I've taken both 3 bar and 5 bar watches to the sea many times with no problem. It's supposed to handle shallow swimming
I would interpret "fully" waterproof as meaning that at the rated depth it won't leak, no matter how much you swirl it around and push the buttons, and that you can leave it there all day.

Most water-resistant devices do not attempt this. You can put them under water, but if you bump them wrong you can ruin them.

Is there a watch with a mic and speaker that's waterproof?
First, Apple bought all of these technologies, including their patents, shutting off the competition from using them. This is of course a sad fact.

Second, all this precise machinery to come up with a watch that looks clunky, and nothing compared to a good vintage Swiss watch. It seems they are doing something fundamentally wrong.

But despite all of this, the technology itself remains very cool, of course.

Apple acquired all of the technologies used in the production of the Apple Watch ?

Call me crazy but I think they have just a little bit of experience at high end industrial design and electronics learnt through the production of the iPod, iPhone and decades of building Macs. Likewise absolutely no talented designers, materials experts or manufacturing gurus would ever be attracted to a company which prides itself on doing cutting edge work at a global scale.

But hey I am sure Apple Watch won't sell at all and definitely won't be making money on those Edition versions.

You're right, the watch is pretty much a miniature iphone.

About its sales, that I don't agree much. I'd bet it won't sell much, won't see widespread use like the iphone/ipad. In a venn diagram it would share too much of the 'geek' part of the diagram with the Google Glass. You have to keep taking it off the wrist to charge, etc. Of course, what do I know