According to the latest figures from research company Canalys, 500,000 smart watches will be sold this year. That figure is up from the 330,000 smart watches that were sold during 2012.
It said that Kickstarter-backed Pebble Technology and Sony will dominate the market during 2013.
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It predicts that by the end of 2014, sales of smart watches will increase to more than five million – a tenfold increase on 2013.
Smart watches are set to become the next big consumer technology category, according to Canalys vice president and principle analyst Chris Jones.
"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,” he added.
However, the analyst firm has warned that devices will have to be considered stylish in order to sell. “Hardware design will be critical for smart watches, as consumers will only want to wear fashionable products,” it said in a statement.
“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’.”
It also predicts major issues for Google and Microsoft in particular.
“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 Canalys analyst James Wang.
“Google and Microsoft must execute more successfully than they have done with their tablet platforms and will have to adapt their business models appropriately.”