Watson was an independent search application on Mac OS, until Apple basically photocopied it and named theirs Sherlock. Since then it's become a verb for when Apple takes your app and builds it into the OS.
Another blatant example was Dashboard, which copied Konfabulator, Night Shift is a copy of F.lux, etc.
When they demonstrated on-desktop widgets the other day, I thought to myself “there goes Konfabulator/Dashboard 2.0”, and then I thought to myself “you’re old enough to remember that and to be caustically cynical”.
Ah you're right, it was Sherlock 3 that copied the Watson features. Mostly related to searching the web for things like ebay listings, recipes, stocks, software.
So the Watson name was probably inspired by Apple's from previous versions, but the Sherlock 3 feature set definitely got cloned from Karelia's.
But if you are successful, there is a chance of getting sherlocked, so its a risky business model.