Smartphones, enterprise internet of things and wearables are expected to drive the adoption of embedded SIM or eSIM globally in the near term.
The eSIM allows users to activate a cellular plan from a telecom operator, without having to use a physical SIM, and can significantly reduce the SIM distribution and activation costs for telecom operators while the potential is to generate higher roaming revenues.
Furthermore, eSIM offers great benefits for consumers and enterprise customers to seamlessly choose, activate, connect and manage connectivity on their devices.
Neil Shah, Research Director at Counterpoint Research, told TechRadar Middle East that Apple’s entire iPhone portfolio for this year will be eSIM and will drive a lot of volumes.
Different forms of eSIMs
The eSIM solutions are available in the market in different forms, mainly GSMA compliant hardware chip and proprietary software integrated based solutions. Currently, the majority of eSIM deployments have been proprietary software SIM solutions.
He said that eSIM’s compact form factor offers significant space reduction for device manufacturers along with potentially higher security, re-programmability and power efficiencies over the traditional SIM card solutions.
He added that Apple, Google, automotive and wearables category adopted GSMA specified hardware chip solution while most of the Chinese smartphone vendors in China use software-based eSIM but it is not GSMA recognised as it does not meet the security standards when compared to the hardware-based eSIM.
“A lot of the Chinese OEMs load the software-based SIM into the Chinese phones and the people can activate the plan and use it for roaming when outside China. So, these OEMs can generate some revenues from roaming,” he said.
iSIM solutions to gain traction
Until 2025, he said the growth will be for eSIM and after that will see a rise in the adoption of integrated SIM or iSIM solutions.
The iSIM is integrated within system-on-a-chip across different device categories, replacing the less secure proprietary software-based eSIM solutions.
“The GSMA has not standardised the iSIM yet. ARM is selling iSIM software after acquiring an IoT security tech business Simulity Labs. Even Gemalto and Qualcomm are working on similar solutions and have submitted their proposals to the GSMA. Hardware-based eSIM will be popular across smartphones and automotive and we believe iSIM will be popular across IoT applications,” he said.
The global eSIM shipments, which includes all form factors, is expected to reach 700m units this year compared to 364m in 2018 and reach 2b units by 2025.
eSIM activation still low in Middle East
In the Middle East, he said that eSIM adoption is rising in smartphones, especially Apple iPhones, as more operators (Zain, Ooredoo, Omant el, STC, du, Etisalat and others) support Apple eSIM but activations are still limited in volumes.
However, he said the biggest growth story is going to happen in IoT where adoption in the Middle East will be much higher over the next two years.
“There are eSIM suppliers such as Workz based out of Dubai driving eSIM adoption partnering with different IoT module vendors to supply eSIM capable modules for applications such as oil and gas, utilities – water, electricity and gas meters, automotive, smart cities and other applications. Companies such as Eseye are partnering with MEA operators to drive eSIM based connectivity across Africa,” he said.
Moreover, he said the market will see a shift in adoption to the GSMA compliant hardware-based eSIM for next five to six years alongside integrated SIM.
“Laptops and drones will experience the largest percentage growth as it is growing from a small base.
With Qualcomm’s always-on and always-connected PC, which has dedicated chipsets - Snapdragon 835 and 850 Mobile for LTE and 8cx for 5G connectivity, we will see smartphone vendors jumping into the bandwagon,” he said.
Enterprise IoT and drones will move more towards iSIM and that will start after 2025, he said, but automotive and smartphones will have hardware-based eSIM as GSMA needs to accredit the iSIM standard and it is expected to happen after 2023.