Last year was certainly the year of wearables. Shipments of the devices spiked from 35.5 million in 2014 to 85 million in 2015, representing a 139% increase year-over-year.
Much of that growth was driven by fitness trackers made by Fitbit (NYSE:FIT) and the Apple (NASDAQ:AAPL) Watch. But while fitness trackers and smartwatches dominate the space, there are other trends pushing wearable tech forward.
Tractica recently released a new report on where wearable tech is headed over the next few years, and the company's research director, Aditya Kaul, shed some light on upcoming wearble trends in an email to The Motley Fool.
So let's take a look at what we can expect over the next few years:
- First off, wearables are just getting started. Wearable tech shipments are expected to jump from 85 million last year to 560 million by 2021. That's a compound annual growth rate (CAGR) of 37% each year for the next five years, and revenue will spike as well. Tractica expects wearable revenue to increase from $12.3 billion in 2015 to $95.3 billion in 2021.
- The Apple Watch will drive wearable tech revenue in the coming years. Apple's smartwatch was already the largest driver of wearable tech revenue last year, bringing in an estimated $5.5 billion, and that trend is likely to continue. In the next 12 to 18 months Apple is expected to become the largest watchmaker, according to Tractica. That matches up with other data that show that the Apple Watch is already proving more popular than Swiss watches.
- Wearables are about to hone in on healthcare. Kaul told us that while sports and fitness are the main focuses of wearables right now, healthcare will be the leading application over the next few years. "Advanced sensor technology, miniaturization of hardware, and smart artificial intelligence algorithms will help bring wearables into the forefront of the fight against chronic conditions like diabetes, heart disease, and cancer. Expect to have your smart watch warn you about a stroke or heart attack, days in advance, which is when wearables will start to be taken much more seriously," he said.
- Smart clothing is already here, and it's about to experience tremendous growth. Under Armour and other companies have already released smart running shoes that track steps, distance, and multiple workouts, but shipments of devices like this were under 1 million last year. That'll change by 2021, when 24.7 million smart-clothing shipments are expected, with most of that coming from footwear.
- While many wearable devices currently pack as many sensors in as possible, future wearables will focus on specific tasks, leaving smartwatches to become more of a platform-based central hub for all wearable tech. Kaul said that we can, "Expect to see more of a body mesh network emerge, which could be termed as the 'Internet of the Body' or 'IoB'. Smartphone companies like Apple, Google, and Samsung will be at the forefront of creating this platform approach. One crucial part of this will be the seamless integration of sensors into clothing, footwear, watches, and other accessories." (bold added)
- Fitbit leads in fitness tracker shipments, but its position may be slipping. The company has about 43% market share right now, while the Chinese vendor Xiaomi has about 24%. But Xiaomi is expected to overtake Fitbit over the next few years It's not all bad news for Fitbit though; fitness trackers are expected to grow at a 25% CAGR, and total fitness tracker shipments will hit 187 million 2021.
While the use of virtual reality is quickly becoming a major focus for tech companies, so will holograph headsets. "While VR will be dominated by gaming and entertainment, expect to see a lot more enterprise computing solutions using holographic mixed reality (MR) headsets like the HoloLens, Meta, or Magic Leap. While on one hand, wearables will help us learn more about our bodies and be inward looking, smart holographic headsets will let us explore and interact with the outside world and the universe like never before," Kual noted.
The wearable tech market is moving fast, and there are a handful of top wearable tech stocks making big waves in the space. But if there's any clear takeaway from the Tractica report, it's that wearable tech is shaping up to be one of the biggest trends over the next few years.
Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.