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From what I can tell, Apple Watch apps act like a remote control to a nearby iPhone using Bluetooth or BLE.

Conversely Android watches have the ability to run full applications, and therefore have a local storage component.

Some regulations require that data be encrypted locally, and this is an extension of Activesync Exchange policy. In addition, it's possible to remotely wipe a phone.

  • Do either Apple Watches or Android Wear have local storage, or cache data from the connected phone?
  • Is there an ability to encrypt, and wipe that cached data?
  • What is the privacy of the data on the device? Can an app on the phone read all data on the watch? What constraints exist?
  • If the watch connects to the internet, is an always-on VPN an option? (some phones have this)
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    Aren't these questions for the vendors? – schroeder Apr 13 '15 at 17:58
  • my initial thought from developing for the pebble is the phone will act as storage and transport for any local or remote data. if your connection is encrypted from phone out then you should be fine. – Ajaxasaur Apr 13 '15 at 19:31
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I am sorry but I cannot speak for Android Wear, I don't know their technical infrastructure. I know a lot about the Apple Watch. So:

Do either Apple Watches or Android Wear have local storage, or cache data from the connected phone?

Yes, the Apple Watch has 8 gig of internal storage and yes they cache the last data you received on each indiviual app (WatchOS1). So for example if u open your news app, the next time you open that app it will continue with the last data. This is a choice for each developer. Banking apps I use don't cache personal data at all (that's why it is so slow).

Is there an ability to encrypt, and wipe that cached data?

From the GUI there is no such option. Building your own app you can do that.

What is the privacy of the data on the device? Can an app on the phone read all data on the watch? What constraints exist?

Apps on the Watch always come with an iPhone app. It's part of the download. That app can read all data from the watch app. But no other app can.

If the watch connects to the internet, is an always-on VPN an option? (some phones have this)

The Apple Watch doesn't connect to the internet. It uses the iPhone's connection. So, partly, yes.

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As of this writing, there are two versions of Apple Watch OS.

  • Do either Apple Watches or Android Wear have local storage, or cache data from the connected phone?

V2 allows for apps to be run locally on the phone, and also to use local storage.

In additional local apps have the ability (without the phone) to leverage Wifi and communicate with the Internet

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  • Is there an ability to encrypt, and wipe that cached data?

tbd

  • What is the privacy of the data on the device? Can an app on the phone read all data on the watch? What constraints exist? tbd

If the watch connects to the internet, is an always-on VPN an option? (some phones have this)

tbd

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