Global shipments of eSIM capable devices, including vehicles, grew 63% y-o-y in 2018 to 364 m units
By Srinath Srinivasan
This year’s Union Budget laid out a clear framework for modern technologies and in that, digital payments, VR, AI and IoT were highlighted. In order to realise IoT and related over the air services, a tiny yet major component on mobile devices will emerge as a harbinger of change: Embedded SIM or eSIM.
According to Counterpoint Research, global shipments of eSIM capable devices, including vehicles, grew 63% year-on-year in 2018 to 364 million units and is estimated to reach close to two billion units in shipments by 2025. This boom has started unfolding in smartphone as well as automobile industries, especially in scale markets like China. In India, the story is still in the beginning stages.
“However, mobile technology broadly has expanded from a simple 8K SIM to 128K SIM in less than 20 years, which is a great achievement given the low per capita income and low GDP per capita in the country,” says R Srinivasan, president and Director, India Business Region, Watchdata Technologies, the majority market share holder in native SIM card supply in India. According to him, currently, Indian market runs on Native and JAVA SIM cards, with Reliance Jio being the largest user of JAVA cards, which enables the company to leverage its 4G infrastructure and provide over the air services seamlessly.
In the global market, things are a bit different, with players like Gemalto and G+D (Giesecke & Devrient) pushing eSIMs already. “The traditional SIM card vendors have maintained the lead when it comes to eSIM enablement. Gemalto and G+D are leading the pack due to their diverse partnerships across the value chain, GSMA certifications, and end-to-end eSIM solutions,” says Peter Richardson, research director at Counterpoint Research.
Switching telecom carriers like switching between Wi-Fi/Bluetooth networks will not be the only applications of eSIMs. Machine to Machine (M2M) communication in industries and healthcare, IoT based services; management of city infrastructure and traffic, ticketing at toll booths, parking and metro services, connected/smart home services and connected car services/ autonomous vehicles are some of the other immediate applications. It will also mean deep penetration of banking and payments services to remote parts of the country where telecos can aim for acquiring new customers. This will also be beneficial to agriculture in rural India where agricultural equipments will see connectivity and better optimisation depending on changing climatic conditions.
Indian telcos are already onto implementing some of these. Vodafone Idea is working with a large ecosystem of partners to ensure wider adoption of eSIM which will allow operational scalability and future proofing of IoT deployements for enterprises. “We are currently piloting and testing capabilities and will be ready to go live with the forthcoming launch cycle of new eSIM devices to service our high value customers who use these devices. As the technology matures and the device ecosystem develops, we expect the demand and adoption of eSIMs to scale up over the next 2-3 years,” said company officials.
Embedded SIM comes at a time when networks are increasingly becoming virtual, which also explains why there has been a constant stress on partnerships among various stakeholders in the telecommunication value chain. Amdocs, a leading software service provider for telecos, which partners with Gemalto, believes that the growth of eSIM adoption equates to the growth of IoT enabled services. Hillel Geiger, head of marketing, Amdocs:Next, says, “For consumer IoT, our biggest focus is helping communication service providers overcome the challenges of implementing eSIM capabilities. On the one hand, this requires logistical and technological preparation and investment they would rather postpone. On the other hand, the train has left the station; that is, Apple’s announcement of future phones being only eSIM enabled, and primacy combined with ability to scale is of essence to succeeding in this domain.”
Telcos will modify their network infrastrucutre for 5G and eSIM, the country as a whole has just settled on 4G and related services. Introducing something as flexible as eSIM along with 5G will mean ultra-competitive pricing and narrow margins. On the manufacturing front, it means changes to the manufacturing facilities and diversification. Srinivasan says, “Today there is considerable amount of automation on our SIM personalisation facility in Bangalore. eSIMs can bring about more automation and we will have to rethink our investments. It also involves working together with device manufacturers and telcos to arrive at sustainable costs and margins.”
To stay relevant, Watchdata has already started conceptualising its smart Android POS devices to work with eSIM, and diversifying into data services. eSIMs also should comply with GSMA communication and security standards. For telecos and software service providers, eSIMs and IoT devices increase the responsibility of weaving new cyber security framework into the network fabric. A connected society will also bring new challenges for the government in terms of data protection and custody.