The Implications of Adopting eSIM Technology
eSIM relates to a standard being promoted by the GSMA, the association that represents network operators worldwide. Many M2M devices and tablets, and now some smart phones, are equipped with eSIM technology. As the specification is backed by some of the world’s largest operators as well as many device makers, it is expected to gain continued and significant traction.
Two recent examples of major manufacturers who have adopted the technology include Apple with their Apple Watch 3 announced in September 2017, and Samsung, who used a GSMA-enabled SIM within their Gear S2 Classic 3G watch. Your Apple Watch 3 will share the same number as your iPhone, so there will be a seamless experience across the two devices.
As a leading manufacturer of standard and custom interconnects, GCT has always been at the forefront of the latest innovations in SIM connectivity; we were the first to market with the Nano SIM connector. Below, we explain our perspective on the technology and how it will potentially impact the market.
The eSIM Technology
eSIM provisioned devices don’t rely on a removable SIM card to access their mobile provider’s connection and billing information. Instead, each device contains a permanently installed embedded SIM chip. Upon entry of an activation code from the mobile service provider – for example a QR code which can be scanned – the smart device downloads the provider’s subscription details into the embedded SIM. Although the delivery method, called remote SIM provisioning, is different, the data provided is the same as that held by a physical Nano SIM.
This move from physical to digital technology has obvious advantages. eSIM information complies with a GSMA standard available to all operators, so users are free to change operators, plans and even devices. Without needing a SIM card or carrier to hold them, eSIMs also offer space savings – which makes them particularly attractive for applications such as the watches mentioned above.
However, eSIM is a relatively new and still-expanding technology, so it carries some risks and work to be done by device manufacturers wishing to deploy it. In general, using an eSIM is more expensive than a traditional SIM. Andrew Stewart, GCT EMEA Sales Manager, comments “The eSIM itself has a price premium, plus the added cost of managing multiple network subscriptions remotely. There are potential issues with deployment, compatibility, connectivity, managing fleets of eSIMs and smart devices and ensuring that all required networks support eSIMs.”
The above information is useful to manufacturers considering going over to eSIMs for their devices, as it explains what eSIMs are, together with their major advantages and issues. However, there are other factors, particularly the customer perspective and expected industry trends that prospective adopters should also consider; we look at these below.
Customer preferences and concerns
Customers are always looking for cost-savings, which is a potential issue given the price implications aforementioned. They also appreciate the space savings, as they realise this can lead to smaller and more compact products, which are always desirable. Equally, though, there are major concerns about security. The ability to program eSIMs remotely is seen as creating a new security risk that doesn’t exist with traditional SIM cards and connectors.
Perhaps partly due to this, customers continue to regard Nano SIMs as a good compromise, as they remain cost-effective and offer space-saving advantages. Some users, especially in the developing world and emerging markets, simply like having the option to change the SIM. Another point for developing regions is that they may not have the wireless infrastructure and facilities needed to support and manage eSIMs.
The physical implementation of eSIMs also offers an advantage – albeit with an associated challenge – as GCT’s Engineering Director, Steve Turner explains: “Devices using eSIMs can be completely sealed, to remove their susceptibility to dust or water ingress, or tampering. However, this sealing also makes repair more difficult if an eSIM malfunctions or fails.”
GCT hasn’t seen that eSIMs have made a significant impact on the market as yet, but expect it to happen soon. McKinsey believes that because of both the strong growth in the number of M2M and IoT devices and GSMA’s development of consumer eSIM specifications, the distribution of eSIMs will outgrow that of traditional SIM cards over the next few years by a large margin. Starting from a 2017 base of $6.6 billion sales for SIMs, and $0.5 billion for eSIMs, they forecast that in 2022, if 2012 – 2017 growth rates continue, SIMs will still dominate the market with $8.6 billion of manufacturers’ sales, but eSIM sales will have grown to $5.4 billion. This represents a 2012- 2017 CAGR of 5% for SIMs, and 95% for eSIMs.
This demonstrates that despite the projected growth of eSIM, the demand for conventional SIM connectors remains strong, with the market for these – especially Micro and Nano SIM types – continuing to expand in the face of slowing growth in standard types that are moving closer to legacy status.
GCT’s SIM connector sales have continued to grow each consecutive year, up 38% comparing 2016 sales versus 2014, with 2017 on track to increase further. This growth is also backed up with further innovations planned for GCT’s SIM connector range. Development is well underway for a Push-Pull Nano SIM connector with card detection switch, along with a Push-Push Nano SIM tray type connector, both of which are unique to the market and give customers even more choice and flexibility for their designs.
“We continue to develop our extensive range of SIM connector types, including low profile options and more Nano connector variants, to provide further space saving opportunities,” added Laurence Hill, Managing Director at GCT. “We remain in an excellent position to offer customers technologies that lead prevailing market trends. In this instance, it is clear that conventional SIM connectors remain a price competitive, proven technology that works. They will have a place in the market for the foreseeable future.”