The best portable way to tell the time is a good, analogue wristwatch. The form-factor of just having to tilt your wrist to find out the time is entirely convenient. Analogue displays are more readable in more conditions, and they give you a spatial, relative representation of the time that a digital clock doesn't provide. Plus, they look good.
I don't wear watches any more. The reason? Everywhere I go, I carry my mobile phone (cell-phone, for my American readers) with me. My phone has a built-in clock. Even though it's not as good an overall timepiece as my watch -- not as convenient, not as stylish, digital -- the fact that it tells the time, and it's always with me makes carrying a watch redundant.
What you don't see is phone manufacturers panicking because lots of people are still wearing watches.
Manufacturers can make their phones into a better timepieces. They can add alarms and multi-timezone support. They can make the time prominent on the outside of the phone when it's asleep. They could synch their clocks with the phone network (why they can't do this is an absolute mystery to me). But they'll never be as good at telling the time as a watch, because they're phones. There are form/function trade-offs that can not be overcome.
A watch can put all of its effort into being a watch.
Having a clock in your phone is a useful, valuable feature. It saves you from having to wear a watch. Other functions in the phone can hook into the clock, making both more powerful. But if you just want to tell the time and don't want to make phone calls, Nokia isn't going to chase you as a customer.