We just keep hearing about an iWatch, so it seems pretty definite Apple is working on such a device. The question is whether they'll bring it to market, since they're known for developing devices that they eventually decide not to release.
Given, though, that CEO Tim Cook has said that Apple has an interest in wearable computing, and given that Apple has hired some top people from the fashion industry, it seems inevitiable that we'll see some kind of wearable device from Apple. And a watch would make sense, since the smartwatch market seems to be taking hold. According to DigiTimes, Qualcomm, Sony, Samsung Electronics, Pebble, Casio, Nike, Adidas, Epson, and LG are all planning to launch wearable devices this year, mostly watches. The DigiTimes article says that Apple is already doing test manufacturing of an iWatch but the "yield rates" are below 50 percent. That means that of the devices manufacture, more than 50 percent have some defect. In order to bring a device to market cost-effectively, the yield rate must be much higher than that. According to DigiTimes, the manufacturers are having trouble with the molded chassis for the watch. Glitches like this, however, are all part of the process, and it won't likely have a bearing on whether Apple brings an iWatch to market.