Wearable technology, or "smart accessories", includes glasses, wristbands and watches that can send and receive information from smartphones.
Paired with a smartphone, smart accessories have so far been used for alerts, geo-tagging and fitness and health monitoring, but it is a developing market. Google Glass, for example, could be used for "lifelogging".
" ... there is really no limit to what can pair with a smartphone. If it can house an electronic circuit, it can become a smart accessory," Telsyte research director Fadaghi said.
According to the research firm, the Australian smart accessories market is set to exceed $1 billion by 2016.
A boom for smartphone-makers
Telsyte's research has indicated that nearly two in three Australians currently use a smartphone.
The emerging smart accessory market could help smartphone-makers expand and retain customers as they invest in the add-ons and accessories available for their phone.
"As smartphones become the new commodity mobile device, smart accessories provide vendors with an opportunity to expand their market and keep customers close to their respective device ecosystems," Fadaghi said.
Telsyte also noted the possible opportunities for the local app market, as most wearable tech requires complimentary apps.