Smartwatch 2014 shipments tick up to 5 million, analysts say

The smartwatch market is all set to heat up very soon, judging from the forecast numbers released by Canalys this week.

According to the latest Canalys forecasts, the worldwide smartwatch market will exceed 5 million unit shipments in 2014. Canalys estimates that more than 330,000 smart watches were shipped in 2012, led by Sony and Motorola. The forecasts represent a 900 percent increase over this year's possible shipments, and new entrants to the market will certainly be adding much stimulus to the growth numbers.

Canalys defines smartwatches as smart wearable bands, which are multipurpose devices that can run third-party computing applications and are designed to be worn on the body and not carried.

Unlike earlier products, these soon-to-be-available smartwatches will provide more sophisticated software and more elegant hardware. Rich information display, integration across sensors and hooks into web services will be key features. These companion devices will not replace smart phones, but rather complement them as "appcessories," said Canalys.

Kickstarter-backed Pebble Technology has joined Sony as a market leader in 2013; over 500,000 units will be shipped this year. Smart watches are then set to explode by the end of 2014, growing tenfold as a new generation of devices from Apple, Google, Microsoft, Samsung, and others are launched.

"Smartwatches will be the most important new product category in consumer electronics since the iPad defined the market for tablets," said Chris Jones, Canalys vice president and principal analyst. "Software platforms tied to smartwatches will also be a tremendous opportunity for developers to write apps in categories such as health and wellness or sports and fitness."

However, hardware design will be critical for smartwatches, as consumers will only want to wear fashionable products, Canalys noted. The market for traditional watches will quickly be disrupted once consumers determine that smart watches add sufficiently valuable functionality to their lives while being "stylish enough." Canalys estimates that over a billion watches were shipped in 2012.

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