I don't see them failing - they will gets cheaper and more powerful over time - you talk about replacing a watch but most young people (and a lot of older people) aren't interested in watches and if they are - they only buy cheap - the average price of a watch sold in the uk is about £100 (according to what I read in watch pro).
Now for many hardcore collectors I think you are right but we are already seeing dropping sales from the Swiss so I would think a lot of companies selling at the lower end (so not your omega or Rolex) will be impacted. I cannot find a link but someone posted an article where a journalist has talked to the Swiss and he got the impression they are sitting on a glut of watches which could be a problem in the next couple of years.