Ok I'm late to this but my thoughts....
Digital did in fact sweep the floor of the mechanical age, I don't know where to find the figures but I'm sure if someone could come up with them they will see mechanical watches are very much a minority of todays watch sales around the world.
Next point to remember is that our hobby is not just mechanical watches but high end watches and they will be around forever, does anyone truly believe they will see the day when they walk into an exclusive country club and see everyone talking to their wrist's?
The mp3 watch was supposed to be something special but already are becoming another kids toy and so too will any new innovative digital watch, once sales start rocking the prices will come down and everyone will have them, the whole point of luxury items are their exclusivity and for this one will always need to go to the Swiss watch makers.
At the end of the day most will be more interested in video conferencing on the mobile phones than watches anyway due to the larger screen size.
Ken