Pebble announced a new version of its smartwatch on Tuesday, as the startup braces for more competition with the arrival of the Apple Watch this year.

Pebble Time marks a first for the smartwatch, which first launched on Kickstarter in 2012: a colour screen. However, it's not the LCD or OLED displays of its rivals, but a colour e-paper screen.

Pebble CEO Eric Migicovsky, a graduate of the University of Waterloo, says sticking with e-paper allows the smartwatch to maintain certain key features, such as always displaying time and remaining visible under direct sunlight.

"They seem a lot like smartphones on your wrist, but they don't really make for useful watches," says Migicovsky of rival smartwatches that have launched since Pebble. "We knew that before we did anything, we had to make a really damn good watch."

Migicovsky, who came up with the idea for a smartwatch while studying systems design engineering at UW, says Pebble Time's colour screen also won't hurt battery life, noting it boasts the same seven-day life as the original Pebble and the Pebble Steel.

The smartwatch is 20 per cent thinner than the original Pebble, and includes a quick-release mechanism to quickly change watch bands. It also boasts a microphone for leaving brief messages or short notes. Users can also pre-record messages for quick replies to notifications.

"We've tried to build something that's intensely reliable and consistent," says Migicovsky of the microphone.

"We didn't want to make something that you speak into and it has to guess what you're saying, or it gets it wrong and you have to constantly repeat yourself, because at the end of the day, you might as well pull out your phone at that point."

Pebble Time will also feature an overhauled software interface that organizes information including notifications, weather, calendar, news, travel and reminders chronologically instead of through standalone apps.

Also, users will no longer be held back by the maximum of eight apps or watchfaces available on Pebble Time. Migicovsky says Pebble is working to make the updated interface available on older Pebble devices after Time launches.

Pebble Time will continue to work on both Apple's iOS or Google's Android platforms, and all apps currently available will work on Time when it starts shipping in May. The watch will be available at retail for $199, but users can back Pebble Time on Kickstarter to receive the watch for $159.

A lot has changed since Pebble first debuted three years ago. Competition in the market has ballooned, with tech giants including Samsung, Google and Apple entering the fray. By 2018, smartwatches will account for 44 per cent of wearable devices sold, according to CCS Insights.

In December, Pebble sold its one-millionth smartwatch, and signed on big names over the past year including ESPN, Yelp and Foursquare.

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"The world is turning to smartwatches," says Migicovsky. "It's great to be in the middle of, but it's not something I would have predicted seven years ago.

"I think we were in it to build something that we ourselves truly wanted. It's kind of fantastic to see that what we've made has kicked off an entire industry."