Smartwatches are the fastest growing segment of the watch market, as traditional timepiece brands struggle. As a result, luxury brands such as Tag Heuer are taking advantage of customer interest in all things high-tech and offering new timepieces combining connected features with classic styling.

This is an important move at a time when traditional watch sales have been in decline, with global Swiss exports down 10% in 2016, compared to the previous year. Swiss exports to the US, the second-largest market for Swiss watches, plunged by 26.2% in 2016 as more customers turned to smartwatches.

“The smartwatch market is now getting a healthy injection from a group of companies that are critical to its growth, and that is the traditional watch companies,” said Ramon Llamas, research manager for IDC’s wearables team.

SEE: Smartwatch sales to hit $17.8 billion in 2020, but business use lagging (TechRepublic)

Baselworld, the longstanding luxury watch trade show in Switzerland, began on Thursday. Watch manufacturers around the globe, whether participating in the invitation-only Baselworld event or not, are busy announcing new product launches this month:

  • Samsung debuted three concept watches inspired by its Gear S3 smartwatch, including a pocket watch version of the Gear S3.
  • Movado unveiled five Android Wear 2.0 smartwatches as part of its Movado Connect line that will launch in the fall of 2017.
  • Tag Heuer launched its Connected Modular 45, featuring Intel’s Atom processor and Android Wear 2.0.
  • Fossil announced it will launch more than 300 connected watch styles across 14 brands this year, from hybrid smartwatches to touchscreen smartwatches. New hybrid smartwatches include the Q Accomplice, Q Activist, Q Venture, Q Explorist, as well as the Fossil Q x Cory Richards. The touchscreen watches are powered by Android Wear 2.0.
  • Guess announced it has two new Guess Connect Android Wear 2.0 smartwatches.

Llamas said he was “delightfully surprised” to see all the new smartwatches at Baselworld. “I think this is as a really good sign for a number of markets. If you take a look at that traditional Swiss watch market, it’s been in decline the past several years. I don’t think Swiss watch makers wanted to miss the boat with this as they did in the late 70s and early 80s when watches went digital.”

Precise numbers on exactly where the smartwatch market will go can vary based on the analysis, and how smartwatches are defined relative to other fitness wearables. Regardless, the numbers show solid growth. The past 18 months have been a time of refocusing and realignment for vendors, with major players such as Misfit being bought up by Fossil at the end of 2015, and Fitbit purchasing Pebble in late 2016. After the mergers and acquisitions, new products are being launched and new technologies revealed.

Llamas said, citing IDC figures, “Last year we saw a total of 19.8 million [smartwatch] units [shipped], which was essentially flat with 2015 levels. This year, we anticipate 27.7 million units. All figures are worldwide.”

Research firm Canalys forecasts the smartwatch market will grow 18% in 2017, with 28.5 million units being shipped. This makes the total value of smartwatch shipments in 2017 slated to hit $10 billion. Canalys also expects to see the traditional watch industry continue its decline with the entrance of new high-end smartwatches. Overall, the value of the smartwatch market will reach about two-thirds of the predicted value of the traditional Swiss watch market in 2017.

Llamas said the switch from tech companies to traditional watch companies dominating the market is key.

“If you look back at the smartwatch market, thus far it’s been dominated by Apple, Samsung, formerly Pebble, and Motorola,” Llamas said. “These are tech companies where design and style come secondary. What we’re seeing with all these watch companies is they’re flipping the switch. They’re leading with style and design. That’s the first thing that sells a watch. It’s how it looks. The technology is tagging along for the ride and that’s okay because technology doesn’t have to be front and center. Most customers want to be noticed for how it looks on them, not how it works.”

The addition of hybrid smartwatches will help push the market forward as well, Llamas predicts.

“The new hybrid watches look like watches, and that’s what we wanted all along,” he said.

Three takeaways for TechRepublic readers:

  1. Luxury watch manufacturers such as Tag Heuer are entering the smartwatch market to try to stay relevant.
  2. Baselworld 2017 began on Thursday, and Samsung debuted three concept watches inspired by its Gear S3 smartwatch, including a pocket watch version of the Gear S3.
  3. Smartwatch sales are predicted to grow 18% in 2017.

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