When International Data Corporation (IDC) asked representatives from leading international companies in five industry segments to share their views on eSIM and its future relevance for consumer, enterprise, and industrial IoT, the results provided highly differentiated insights. But one thing was immediately clear: right across the industry it was the benefits that stood out. The overwhelming majority of key industry players believe that transition from traditional SIM cards is accelerating in 2020 and that this will increase swiftly over the next two years. eSIM is the fuel that will drive the massive IoT machine – and it’s already happening today.
eSIM technology drives IoT devices
In 2023, a million new devices will connect to the internet. Every hour, says Gartner, the world's leading research and advisory company. One year later, the number of connected devices is expected to exceed 40 billion. No wonder then that according to a global survey commissioned by G+D and carried out in 2019 and 2020 by leading market research company IDC, the global ecosystem sees embedded SIM (eSIM) technology as a core strategic asset for secure connectivity on the internet of things (IoT).
Enormous potential to IoT
IoT is a megatrend that will become the biggest, most powerful machine that mankind has ever built. To make massive IoT successful and beneficial for societies and economies, three fundamental ingredients are key: data authenticity, privacy, and security.
For more than three decades the traditional SIM card (UICC) has been used as the trusted, tamper-proof element for secure authentication of users and mobile devices to cellular networks across the world. Now, emerging eSIM technology is adding its enormous potential to the IoT. eSIMs (also known as eUICC) and their anticipated evolution towards iUICC will form the root of trust, and eSIM technology can offer all mission-critical propositions – from remote manageability to safeguarding the integrity of any device and any data transferred.
eUICC is generally trusted and considered the most secure technical solution among digital SIMs to date, with almost half of respondents ranking it first in security and 80% in the top three. The high level of trust for eUICC can be explained by three factors. First, it was developed as a clear evolution of removable SIM (UICC), which has been widely used for decades, rather than a dramatic change to a new type of solution. Second, the development of eUICC specifications has been completed and battle tested in commercial deployments. Third, the GSMA-led specifications-making processes have engendered significant industry confidence.
iUICC is an interesting future alternative. Efforts are underway – coordinated by the GSMA – to define specifications for iUICC technology, for example providing that production facilities and procedures are secured and certified. Nevertheless, key security and certification concerns must be resolved before iUICC can be adopted beyond narrow niches. This will take a few more years. For now, iUICC is likely to be utilized only in certain niches, primarily in smaller, space-constrained IoT devices, while eUICC looks set to be embraced across the spectrum of consumer, enterprise, and industrial devices.
A huge boost to connectivity
The industry sees strong benefits to eSIM technology as well as a few, addressable challenges. eSIM allows multiple connection profiles per device (including those that have not previously been connected), easier switching between networks, enhanced security, and space saving. According to one respondent to the survey, “eSIMs remove barriers. Remote change of operators provides freedom to our enterprise customers considering and deploying massive IoT solutions.” The broader business benefits highlight an overall better customer experience, with faster, real-time service provision, offering vendors the opportunity to drive digitalization and new use cases as well as increase revenue opportunities.
Of course, any significant transition poses challenges, and eSIM is no exception. Mobile network operators (MNOs), automotive, and IoT device/platform players were understandably concerned about aspects like security and privacy, establishing new, fully digital channels to onboard customers, and the risks of increased customer churn. But across the industry, key players believe that the benefits of eSIM technology outweigh the challenges.
Massive deployment in the new era
The 5G era of connectivity is going to be one of collaboration, as the wireless landscape becomes more complex, but already existing IoT networks can leverage from eSIM. According to the survey, eSIM is a widely accepted, viable technical solution for cellular networks and low-power wide-area (LPWA) connections. Eighty percent of respondents expect eSIM to be the primary means of network authentication within two years for nearly all eSIM-enabled device types – that includes smartphones, wearables, consumer and commercial vehicles, tablets, laptops, notebooks, and other consumer IoT devices. Moreover, many in the ecosystem expect eSIM to be leveraged for an array of functions beyond connectivity, as eSIM benefits massive IoT deployment in the 5G era, playing a role in device attestation, data integrity, and E2E cloud encryption.
The industry is bullish on the pace of eSIM adoption and fully committed to moving ahead fast with eSIM technology. With the transition expected to accelerate now and speed up over the next two years, a convincing 94% of respondents plan to either lead or take part in development of the eSIM ecosystem, while no less than 100% of MNO executives who resonded to the survey have taken the decision to support eSIM. One respondent noted that eSIM would “open up new revenue opportunities for MNOs, as our customers scale up their plans by adding new devices which require data plans.”
The transformation is already underway
2020 is the year when eSIM is poised to accelerate and IDC’s recommendations to the eSIM ecosystem are clear. To avoid being outplayed by their competitors, MNOs and vendors that aren’t already supporting eSIM are highly recommended to formulate a realistic plan of action for when they do so. That’s not if, but when. Admittedly, this will involve changes to business processes and systems so they can provision customer profiles to eSIMs using digital-first, zero-touch processes and customer channels.
MNOs that switch more aggressively to eSIM-driven zero-touch provisioning may request that OEMs move more quickly to deploy eSIM in mid- and low-tier devices. Because what’s beyond question is that both OEMs and MNOs must recognize that the transition has already started. It’s time to invest in the development of this massive opportunity. To dedicate resources in educating users to not only make them aware of the many reasons why eSIM is easier, faster, and better to use than removable SIM cards. But to also build and develop a strong momentum for new use cases and profit pools.
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