What flaw did James Watt identify in the Newcomen steam engine?

James Watt identified that the primary flaw of the Newcomen steam engine was its significant waste of steam and energy.1

Specifically, Watt realized that the engine suffered from a massive loss of latent heat because the cylinder was repeatedly heated and cooled during each cycle. In the original design, condensation occurred directly within the cylinder, which meant the cylinder had to be cooled to condense the steam and then reheated to receive the next charge of steam.12

To correct this, Watt invented a separate condenser connected to the cylinder. By allowing condensation to happen in a distinct chamber, the main cylinder could remain hot, drastically increasing the engine's efficiency and reducing fuel consumption.21