330,000 smart watches were shipped in 2012.
Global smart watch shipment is expected to surpass five million units during 2014, which is a 900% rise over projected shipments for 2013 as new entrants are set to boost the market, according to a new report.
Canalys latest forecast reveals that over 330,000 smart watches were shipped in 2012, which was mainly led by Sony and Motorola.
Kickstarter-backed Pebble Technology has joined the smart watch race with Sony in 2013, with over 500,000 units projected to be shipped during 2013.
Canalys VP and principal analyst Chris Jones said that smart watches will be the most important new product category in consumer electronics since the iPad defined the market for tablets.
"Software platforms tied to smart watches will also be a tremendous opportunity for developers to write apps in categories such as health and wellness or sports and fitness," Jones said.
The report projects that once consumers believe that smart watches add valuable functionality to their lives and are ‘stylish enough’, it could disrupt the global market for traditional watches.
Canalys analyst Daniel Matte said that strict power constraints will prohibit cellular technology, limit the number of sensors and necessitate communication with smart phones over Bluetooth Low Energy.
"ARM architecture licensees that design custom silicon will enjoy significant hardware advantages in this space," Matte said.
However, hardware design would be a vital factor for smart watches, as users will only wish to wear fashionable products.
Device vendors would face tougher challenges as smart watches would also require custom software.
Canalys analyst James Wang said that an effective smart watch won’t just be a second screen for a smart phone. Creating a competent developer platform specifically for the form factor will be an enormous challenge.
"Google and Microsoft must execute more successfully than they have done with their tablet platforms and will have to adapt their business models appropriately," Wang said.