Mikey Campbell at AppleInsider:
[KGI analyst Ming-Chi Kuo] believes Apple is planning to launch two new Apple Watch versions in the second half of 2016, both of which offer moderate improvements over their predecessor. The first unit will be an iterative upgrade on the original Apple Watch and is expected to sport the same aesthetics, but with improved intervals like a TSMC processor built on the 16nm process. Waterproofing should also be slightly improved.
A second version, dubbed “Apple Watch 2,” is also expected to share the same general design as current models, but will include a GPS radio and barometer for improved geolocation capabilities. A higher capacity battery will be included to power the advanced components, but its size will prohibit Apple’s usual generational device slimming.
I wouldn’t be surprised if the major external differentiator between the current Apple Watch models and the second-generation units is in the finishings. I doubt the Edition model will hang around, but new case options like titanium or bright colours for anodized aluminum might be fun.
These days, Apple tends to drop the price of the existing units while leaving them on sale, so it seems likely that they’d do the same for the Watch. But, like the iPad 2’s quiet update from a 45nm process A5 to a 32nm variant in 2012, it could go completely unannounced.