Summary Bullets:
• eSIMs first emerged in 2016, with strong potential for adoption in both consumer applications and industrial IoT.
• A new standard was published earlier in 2023, which will make using eSIMs for IoT easier for device makers and enterprise users, likely prompting growth in cellular IoT market opportunities.
SIM cards have long been a tool for mobile operator control of user devices. Dedicated to and often issued by an operator, once inserted in a device, there is a good chance the device would remain subscribed to the operator’s service as long as it was being used. ‘Control’ may be too strong of a word, but plastic SIMs certainly helped maintain a high level of customer ‘stickiness.’ Swapping out SIM cards – which provide user identification and authentication for network access – is a slow and clunky process whether there is one device or 10,000 devices involved.
The eSIM emerged around 2016, with the GSMA publishing standards for consumer devices and M2M (cellular IoT) devices. The embedded SIM (eSIM) or universal integrated circuit card (eUICC) is a digital, software-based version of the physical SIM card that can be programmed remotely via software download and stored on a relatively tiny (6x5mm) microchip. As a result, the eSIM provides device independence, enabling users to switch between mobile operators without physically changing SIM cards.
While operators were very concerned (and many are still very concerned) about the use of eSIMs in phones, they saw the potential in consumer IoT for driving device sales, which gave them upsell and cross-sell opportunities. By 2018 and 2019, the more ‘industrial’ IoT device makers were declaring their support for eSIM, recognizing how powerful the opportunity would be for them. There weren’t many products or solutions yet, but there was plenty of enthusiastic messaging, blog posts, and promises for users of cellular IoT. In addition to device independence from operators, both device makers and enterprise users would benefit from lower costs resulting from the reduced physical requirements of the device as well as lower management costs.
While IoT eSIMs were soon being offered by the main vendors of SIM card and device componentry, operators still retain a level of control since the swapping of operator profiles (account relationships with different network providers established and saved in the same eSIM) must be done by the operator. Using an eSIM to dynamically switch between operator networks is not possible using the industry’s original IoT eSIM standard.
In May 2023, however, the GSMA published a new specification – SGP.32 – which adds automation and intelligence to the eSIM and an eSIM manager module enabling remote provisioning. Once the new specification has been fully tested, device makers and enterprise users will be able to benefit from a more flexible eSIM architecture, which places the device first in any IoT deployment, rather than any one operator. This will impact the global cellular IoT market and should account for at least some of the revenue growth projected in GlobalData’s enterprise IoT forecast (five-year CAGR through 2027 of 17.3%).
Part of that growth could be spurred by new connected products made available by OEMs for IoT-enabled use cases. Manufacturers will no longer have to negotiate connectivity deals with operators in different territories or make their products only for distribution in the largest markets. Manufacturing products that enterprises can use no matter where they are, or which operator they use for IoT connectivity, will drive growth in the number and range of available devices. It will also make it easier to leverage multiple operator networks for mobility-centric use cases (like fleet management and asset tracking) or where operator coverage is variable across a deployment’s footprint and may require ongoing connectivity from more than one network to support all devices.
IoT connectivity and solution providers are starting to promise support for eSIM management, with more sure to follow. While mobile operators will lose some level of control of the relationship between the SIM and the device, opportunities for new, frictionless connected-device manufacturing, and the enablement of always-connected use cases (regardless of any one network’s coverage), will create a rising tide that should raise all boats.