I think audio translation when it's quite close to real time will feel more natural without the phone in the hand than with it especially with a well functioning gesture interface, but yeah, there's nothing that stops a phone from doing it.

Also agree this is more a smartwatch competitor than a phone competitor. The fact that smartwatches sell at all is proof there are (much smaller) markets for wearable devices that do stuff that can be done at least as well on a phone if you get it out your pocket, the argument for separating the powerful internet connected functionality from the watch and having it on some other wearable on your chest is that actually I like the wrist-mounted device that tracks my activity and sleep to not need charging every day...