The total value of smart watch shipments in 2017 will reach $10 billion, as shipments increase 18 per cent to 28.5 million units, according to Canalys.
The research company said there will be further declines in the traditional watch industry as smart watch manufacturers release more high-end models. As the average selling price of smart watches climbs, the value of this market will be two-thirds that of the traditional Swiss watch market this year.
Canalys said while the traditional watch players are trying to catch up with the smart watch trend, some are still reluctant and will release hybrid or connected watches instead. These are a “short-term, intermediate solution” as watchmakers find ways to stabilise the decline in their core market.
“Connected watches appeal to buyers who want a watch first and a basic band second. With fewer people wanting to buy traditional watches, connected watches with limited functionality risk ending up like basic bands: being taken over by smart watches by 2018,” said Canalys analyst Jason Low.
Fossil has seen its traditional market shrink, with wearables quickly becoming the growth driver. While it is a nascent market, smart watches are also having an impact on the high-end, and companies including Swatch have yet to embrace the smart watch market.
Canalys in February revealed Apple dominated the smart watch market in terms of revenue during Q4 2016.