ABI Research, the leader in transformative technology innovation market intelligence, predicts annual Bluetooth device shipments to reach 5 billion by 2021. Though smartphones will still account for 43% of Bluetooth device shipments at this time, Bluetooth Smart, also known as Bluetooth Low Energy, is exhibiting the strongest growth with a predicted 34% CAGR between 2016 and 2021, driven by new opportunities in beacons, home automation, and wearable applications in which lower energy consumption is critical. As a result, Bluetooth Smart Devices will account for 27% of total Bluetooth shipments by 2021.

“While there remain significant opportunities for Bluetooth smartphone accessories and connected home devices, there will be increasing traction toward connecting to everyday household objects,” says Andrew Zignani, Industry Analyst at ABI Research. “This will be driven further by mesh networking and IPv6 enhancements. Improvements in energy efficiency and range, and reductions in size, will be contributing factors accelerating shipment growth. However, initial mesh implementations will target less power conscious devices, such as smart lighting, rather than beacons and more sophisticated wireless sensor network applications due to 'the extra power consumption that mesh will require.'”

ABI Research finds it will also become increasingly critical to incorporate Bluetooth in routers and other smart home gateways for when an intermediary device, such as a smartphone or tablet, is not present. But Bluetooth faces its fair share of competition. Though it is widening its appeal, Bluetooth faces great difficulties in gaining traction in certain markets in which other low-power wireless technologies, such as Z-Wave, 802.15.4, HaLow, and Wi-Fi are more suitable.

“OEMs and IC suppliers should take advantage of new enhancements to range, throughput, and mesh networking in Bluetooth to compete against other IoT connectivity solutions,” continues Zignani. “IC suppliers should specifically integrate with other connectivity solutions to enable new usage scenarios and focus on ways to differentiate, such as by reducing size and power consumption. OEMs can also utilize Bluetooth’s throughput advantage versus 802.15.4 and lower power consumption versus Wi-Fi in order to create new and unique use cases that separate them from competing connectivity solutions.”

Combo solutions will become increasingly important to the market moving forward, while integration with other technologies such as NFC in order to securely provision headless IoT devices will also become more common. Power will also become increasingly critical and soon result in improvements in sleep states and radio operation, as well as enable growth in ultra-low power IoT nodes. Given the many upcoming enhancements, the building of reference designs and developmental tools will be critical in upcoming years in order to ease deployment.

“While suppliers such as Broadcom, Qualcomm, and MediaTek are still the key drivers of Bluetooth’s overall numbers, IoT focused players like Cypress, Nordic, TI, and Silicon Labs also have significant potential for growth due to new opportunities for Bluetooth in these emerging markets,” concludes Zignani.

These findings are part of ABI Research’s Bluetooth Service, which includes research reports, market data, insights, and competitive assessments.