Seattle - According to a new report from NextMarket Insights, the growing adoption of smartwatch software and wireless technologies by traditional watchmakers, the continued advancement of screen and mobile processor technologies and the strong expansion of smartwatches in the children and health/active lifestyle segments will drive the overall smartwatch market from 15 million watches shipped in 2014 to over 373 million by 2020.
"The watch industry ships over 1 billion watches a year, and there are nearly 7 billion mobile subscribers worldwide today," says Michael Wolf, Chief Analyst. "We believe the smartwatch category can become a substantial market opportunity even with fairly modest penetration of the broader mobile and watch-wearing public."
While most smartwatch market outlooks have focused almost exclusively on companion smartwatches, NextMarket Insights believes standalone smartwatches will also see substantial growth. Standalone smartwatches are those smartwatches with fully functional calling and data communication capabilities. In 2013, numerous Chinese smartwatch manufacturers released Android based standalone smartwatches, and western manufacturers such as Filip Technologies and Omate will ship products this year.
"We believe native voice and data capabilities in smartwatches will be attractive to a segment of the market," says Wolf. "Both for those who would use it in backup and lifeline scenarios, as well as those who see might see a smartwatch as a replacement for a phone in certain use cases common in the youth and active lifestyle watch segments."
The growing smartwatch market will lead to a fast maturing market ecosystem, across the hardware, services and software layers. In software, today's smartwatch manufacturers utilize existing smartphone OS's such as Android and new software frameworks on top of lightweight operating systems such as FreeRTOS and .NET Microframework.
"Going forward, we see the smartwatch market coalescing around three major software camps," says Wolf. "The vast majority of smartwatches will be built using existing or modified versions of Android, new smartwatch operating systems such as the Pebble OS, and - assuming that Apple ultimately gets into the market - iOS."
The report, Smartwatch Forecast 2013-2020, is available today for purchase.
Follow NextMarket on Twitter
To hear an extensive set of interviews conducted for this report, check out our interview archive.