Will Smart Watches Boom or Bust in 2014?

Smart watches are all the rage. Well, at least the notion of smart watches is. But are smart watches really worth the money? Will they rank high on wish lists for this holiday season? Will the segment all-out explode in 2014?

Some industry analysts are indeed predicting a smart-watch boom, especially with Apple expected to enter the market in 2014. Canalys estimates the smart-watch market will exceed 5 million shipments in 2014.

It's been a slow and steady climb for the wearable technology. Canalys estimates that 333,000 smart watches were shipped in 2012, with Sony and Motorola leading the charge. In 2013, the firm forecasts more than 500,000 smart watches will ship before the market grows exponentially in 2014, with 5 million shipments as Apple, Google, and Microsoft join the fray.

Opportunities and Challenges

"Smart watches 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 smart watches will also be a tremendous opportunity for developers to write apps in categories such as health and wellness or sports and fitness."

Canalys said hardware design will be critical for smart watches, as consumers will only want to wear fashionable products. The firm predicted 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 more than a billion watches were shipped in 2012.

Despite the predicted success, though, Canalys said device vendors will face a number of tough challenges.

"Strict power constraints will prohibit cellular technology, limit the number of sensors and necessitate communication with smart phones over Bluetooth Low Energy," said Canalys analyst Daniel Matte. "ARM architecture licensees that design custom silicon will enjoy significant hardware advantages...

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