The worldwide smart watch market will exceed 5 million unit shipments in 2014, according to forecasts from research firm Canalys.

The company estimated that more than 330,000 units were shipped in 2012, led by Sony and Motorola. Sony has been joined by Pebble Technology as the market leaders this year, with Canalys anticipating that this will see more than 500,000 devices moved in 2013.

The market will then take off “as a new generation of devices from Apple, Google, Microsoft, Samsung and others are launched”, it said.

Unlike earlier products, Canalys said, these new smart watches will provide more advanced software and improved hardware, complementing smartphones as “appcessories”.

The company noted that hardware design will be critical, as customers will only buy fashionable products. It said: “The market for traditional watches will quickly be disrupted once customers determine that smart watches add sufficiently valuable functionality to their lives while being ‘stylish enough’.”

But the market is not without challenges. In terms of hardware, power constraints will “prohibit cellular technology, limit the number of sensors and necessitate communication with smartphones over Bluetooth Low Energy”.

Canalys analyst Daniel Matte noted: “ARM architecture licensees that design custom silicon will enjoy significant hardware advantages in this space.”

And smart watches will also require custom software. “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,” said analyst James Wang.