News that Apple has launched a global eSIM-only iPhone – three years following its release of an eSIM-only model in the US – was met with excitement by industry experts, who believe Apple’s decision will catalyse greater adoption of eSIMs worldwide.
The US is a prime example of this: according to an industry checkpoint consumer eSIM Q3 report recently released by GSMA Intelligence, the launch of eSIM-only iPhones in 2022 boosted adoption to 30%.
The report also reflected that adoption of the consumer eSIM market has not been as fast as predicted: in 2024, 3% of connections globally are eSIM, a marked difference from the 15% predicted six years ago.
Furthermore, only 50% of consumers are aware of eSIM technology.
“If you think about the companies who have the ability to influence awareness, we are talking about MNOs and OEMs,” said Pablo Iacopino, Head of Research and Commercial Content, GSMA Intelligence in an exclusive interview with IoT Insider. “So far, their strategy has been to make the technology and the service available but not to talk too much to consumers.
“In our survey, we asked consumers how they discovered eSIM. And the top reason was because they read an article about eSIM, not because an operator spoke to them about it.”
The reasons behind this reticence are multiple, Iacopino said: adoption at the moment is slow and OEMs and MNOs want to wait and see how the market will grow; and consumers aren’t asking for eSIM as a capability in their smartphones.
“The top things are battery life, quality of the operating system, security of data, and camera quality,” said Iacopino. “From a messaging and sales perspective, the push is obviously on the things that matter the most so that’s why it’s not easy.”
Travel eSIM remains most successful use case
One proposition mentioned by the report as being the most successful use case is travel eSIM. For consumers who previously had to debate between purchasing a SIM upon arriving in a country, or being a ‘silent roamer’ – someone who relies on Wi-Fi for connectivity and doesn’t purchase a SIM – travel eSIM takes away that quandary by enabling an end user to switch between another operator profile that connects them in that country, without the need for a physical SIM.
“Silent roamers are now becoming active users because it’s more transparent, it’s more predictable, and they know how much they will spend,” said Iacopino. “Some of them are saying, ‘in the past I used to rely on Wi-Fi only. Now I see the value in travel eSIM to get connectivity’.”
Although the eSIM market is still in the early stages of its growth, an observed increase in investor funding will lead to new companies and new propositions being launched into the market.
“This is a confirmation that investors see value in travel eSIM,” added Iacopino.
In fact, eSIM captured 16 investor deals worth $5 million or more, with a total of almost $700 million, the report noted.
These deals included Airalo becoming a unicorn after it raised $220 million in July and 1NCE raising $60 million in April.
Iacopino said he didn’t foresee there being competition between new entrants and established operators, with a predominant reason being the way in which startups operate: “The typical approach of a startup is to enter a market when a service is new, for example travel eSIM, to stimulate innovation, to explore use cases, to build momentum.”
In fact, major telcos are backing startups by providing funding and investment. SoftBank has invested in Kigen and 1NCE, while Airalo, the unicorn, is the most backed with investments from Telefónica, KPN, Orange, Liberty Global, Rakuten, and Singtel.
The report also mentioned that this was a prime time for startups to be the main driver behind eSIM innovation.
“What I would really like to see in the future is more eSIM startups exploring new use cases, rather than existing use cases,” said Iacopino, adding that these existing use cases are travel eSIM and eSIM for IoT.
Apple will catalyse eSIM adoption
The release of the iPhone 17 Air is Apple’s first eSIM-only device which will be used worldwide. However, although Iacopino said he expected this to catalyse eSIM adoption, Apple’s other models have SIM capability – proof that the smartphone manufacturer is, for the time being, betting on offering both.
This is due to a range of reasons, partly because of consumer awareness and education, partly because of the maturity of the market, and the disparity in adoption worldwide.
“My expectation is that the launch of eSIM only worldwide by Apple will probably put pressure on the other vendors to think about what to do,” said Iacopino, explaining that Apple is expected to boost adoption, and other vendors will want to capitalise on this opportunity.
For the time being, a gradual transition towards eSIM-only models is more likely. “As a smartphone vendor, you have two options: one is to go eSIM only, but the other is pushing the eSIM more without removing the SIM … I think the latter is going to, in the short term, be the bigger difference.”
Although China’s eSIM adoption is currently at 0, smartphone vendors there may well be thinking about the significance of Apple’s announcement and whether the time is ripe to launch their own propositions.
“Transition to eSIM will take many years, and that’s why OEMs want to be cautious because they know there are so many factors to consider,” concluded Iacopino.
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