If 5 & 5c customers hold onto their phones another year, and a new watch comes out, why would they buy the old buggy technology, just because their phones won't run the new?
Perhaps it's me, but I'd think most 5/5c customers would upgrade their phones first before the AW. It makes no sense to upgrade to AW2 from AW1 and still keep a four-generation-old iPhone, especially considering that the AW is only a companion device for iPhone.