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Why Smartwatches Are Poised to Explode

Stocks in this article: AAPL SNE MSFT GOOG

NEW YORK ( TheStreet) -- Get ready tech fans: Smartwatches are coming, and they're coming in a major way.

Research firm Canalys says there will be at least 5 million smartwatches sold worldwide in 2014, an increase of 900% over the current year.

Of course, that's largely related to companies like Apple (AAPL), Google (GOOG), Microsoft (MSFT) and others who are likely to get in the sector in the next twelve to eighteen months.

Sony (SNE) and Nike (NKE) currently have offerings in the space yet neither company has taken a lead as consumers wait to see the best that these companies will offer.

"Smart watches will be the most important new product category in consumer electronics since the iPad defined the market for tablets,'' Chris Jones, Canalys VP and Principal Analyst, said in a press statement. ''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.''

Of course, everyone expects Apple to get in the game with the oft-rumored iWatch. Where Apple may shine with the iWatch, and where so many have failed, is that the hardware needs not only to be aesthetically pleasing but also fashionable and stylish.

Smartphones come in all different shapes and sizes, and while watches do to, the basic shape of a watch is likely to be the same: a face with a band around it.

There's also the issue of power consumption. Smart watches are going to be on pretty much all day, and will need lower-power microprocessors to help power them, notes Canalys Analyst Daniel Matte. "ARM architecture licensees that design custom silicon will enjoy significant hardware advantages in this space."

Smart watches are coming, and could be poised for big business. Morgan Stanley analyst Katy Huberty has said the market might be worth $10 billion to $15 billion for Apple, and could be multiples more for all the other companies combined. If the above companies can figure out a way to create and market a product that people need and is not just a second screen for a smartphone, then perhaps the hardware innovation that's been lacking in recent years will go the way of Dick Tracy.

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