The man in the trench coat offering watches for sale is shifting to selling smartwatches, with Telsyte saying smartwatch sales will exceed $400 million by 2018, alongside nearly 17 million smartphones.

The ‘emerging technology analyst’ points out that ‘watch jewellery is a mature market with around 40% (or more than 7 million) Australians (age 16 and above) wearing a watch almost every day.

Presumably this means the other 60% have given up on watches pending the current smartwatch revolution (and upcoming Apple Watch launch) due to the fact their smartphones tell the time quite handily.

Telsyte doesn’t mention this other 60%, but does note the challenges the smartwatch market faces, nevertheless pointing out they ‘have the potential to disrupt the traditional market as people consider wearable devices an extension to their smartphone and apps they use for fitness and communications.’

Indeed, in 2015, Telsyte predicts the smartwatch market ‘is expected to grow by at least 50 per cent in 2015 due to the arrival of an Apple Watch,’ despite the fact that Samsung, as an early mover in the market, is the current market leader.

Telsyte MD Foad Fadaghi says ‘smartwatches will become more appealing to consumers as new stylish and featured devices enter the market, with the 25 to 44 year-old age group representing the best sales opportunity in 2015.’

Fadaghi's said: “There is a lot of anticipation for the Apple smartwatch and our research indicates half of all smart fitness band users are looking to upgrade to a smartwatch, creating a potentially vibrant new product category”.

While analyst firm Canalys pointed to 720,000 Android Wear watches and 4.6 million wearable bands being sold in 2014, those appear to be global figures, while Android Wear isn’t the only smartwatch platform - with Samsung using Tizen and other smart watch operating systems out there.

Telsyte’s figures are for Australia, and showed that over 800,000 smart wristbands such as those made by Fitbit and Garmin were sold in 2014.

As with smartphones, consumers consider ease of use, pricing and battery life the most important attributes of smartwatches. Many current smartwatches have been criticised for their short battery life and limited unique usage scenarios.

Telsyte’s research found the top three applications people want from a smartwatch are to:

1. Check the time and date
2. Use it as an alarm clock or a reminder alert
3. Read messages, including e-mail.

Clearly, my interpretation from this is that this is what consumers expect from smartwatches today, but with a whole host of interesting apps available for Android Wear watches, for Samsung’s snazzy Gear S watch and a stack of apps coming for the Apple Watch, we’ll soon be able to add:

4. Running genuinely useful, ‘glanceable’ apps that provide useful information when you need it

to the list!

After publishing the story, Telsyte MD Foad Fadaghi sent a couple of comments to me in an email, which he gave me permission to include here, as they’re interesting additions to this article.

Fadaghi says: “One point I’d add is that that it’s an interesting benchmark figure of 40% wearing watches. Clearly, both existing watch wearers AND non-watch wearers are the target market, but interestingly, the purchase intentions are HIGHER with existing watch wearers.

“Also you are right, it’s all about Glanceable ‘app extensions’. Until we see more of these, the utility of smartwatches (or the perception) is limited. If people say 'tell the time and date' as the first reason to our next survey, vendors would have done a bad job of selling it as a disruptive technology!”

Back to the rest of the article, Telsyte also points to smartphone sales maturing as hand-me-down devices shake up the mid-market.

Its research shows ‘there were 16.8 million smartphone users in Australia at the end of December 2014 with sales of just below 5 million units in the second half of 2014.’

Interestingly, Telsyte says ‘this was around 10 per cent less than Telsyte expected over H2, despite very strong iPhone 6 sales.’

Telsyte Senior Analyst Alvin Lee says ‘the iPhone gained market share in H2 2014, but the overall share trends are likley to change again as an Android-users upgrade cycle in expected to commence in early 2015.’

However, Telsyte has recognised increased competition to Android device by older model iPhones, typically received through a ‘hand-me-down.

Lee added: “The durability of handsets and the hand-me-down phenomenon is impacting the market, along with a flood of second hand iPhones cutting into sales of mid-tier Android handsets in the second half of 2014.”

Telsyte estimates 1.3 million iPhone 6 and 6 Plus units sold in Australia last year, with the iPhone 6 outselling the iPhone 6 Plus, at a ratio four to one.

Despite this Telsyte believes the demand for phablets or larger form factor smartphones is growing and will represent around a quarter of smartphones in use by 2019.

Naturally, Telsyte hopes to tempt the relevant technology and telco companies to buy its ‘Australian Smartphone & Wearable Devices Market Study 2015’.

Visiting Telsyte’s site will give you all the details you need if you’re in the market to buy it.