The demand for wearables continues to grow, with fitness and activity trackers now in fierce competition from smartwatches and a number of vendors making a play in the market.
According to Research and Markets, shipments of connected wearables reached 72.5 million in 2015, up from 25.3 million devices in the previous year.
Growing at a compound annual growth rate of 25.8%, total shipments of smartwatches, smart glasses, fitness and activity trackers, people monitoring and safety devices and medical devices as well as other wearable devices are forecasted to reach 228.3 million units in 2020.
Bluetooth will remain the primary connectivity option in the coming years, the researchers found.
A total of 17.8 million of the wearables sold in 2020 are forecasted to incorporate embedded cellular connectivity, mainly in the smartwatch and people monitoring and safety categories.
Apple entered the connected wearables market in Q2-2015 and quickly became the leading smartwatch vendor.
The competition is responding with increasingly capable and attractive devices from Android Wear vendors including Motorola, LG, Huawei and Asus as well as from vendors betting on other platforms such as Samsung and Pebble, Research and Markets says.
Smartwatch sales have picked up considerably during 2015 and shipments are on the track to reach 19.5 million units by the end of the year, a 353% increase year-on-year.
This market development has not gone unnoticed by the traditional watch industry and several vendors, including Fossil and TAG Heuer, have presented smartwatches of their own, says Johan Svanberg, Berg Insight senior analyst.
Improved devices available in different price segments will drive adoption in the next five years and the smartwatches segment is predicted to become the largest device category by the end of the forecast period, according to Research and Markets.
This product category is proving to be fierce competition for fitness and activity trackers, as in many cases these devices include activity tracking features.
However, today fitness and activity trackers is still the largest device category and shipments are expected to reach 51.0 million units in 2015.
Market pioneers such as Fitbit, Jawbone and Garmin have been joined by an abundance of companies including major players from the smartphone industry.
Xiaomi has been particularly successful with its affordable trackers and the company is the only fitness tracker vendor which can compete with Fitbit in terms of sales volumes, says Svanberg.
Decreasing prices and new form factors will still enable dedicated fitness and activity trackers to reach shipments of 71.0 million units in 2020.
Connected wearables such as cardiac rhythm management devices, ECG monitors, mobile Personal Emergency Response Systems (mPERS) and wearable computers are already common in the medical, people monitoring and enterprise segments.
Furthermore, miniaturised electronics, low power wireless connectivity and cloud services have enabled the development of a wide range of new connected wearables such as authentication and gestures wristbands, notification rings, smart motorcycle helmets and smart gloves, says Research and Markets.
Shipments of smart glasses have so far been very modest, but promising use cases in professional markets as well as in niche consumer segments will enable this segment to become a sizeable connected wearable device category in the next five years, the researchers say.