2020: the year of the eSIM?

The eSIM (Embedded SIM or eUICC) is finally gaining market adoption after years of hesitation and feet dragging from various players in the telecom value chain.

The detachable SIM has been in existence for over thirty years, it has been the lead driver for the secure transactions industry for decades, in terms of turnover, margin, production volumes and innovation level. Theoreticians of innovation lifecycles may question where the SIM stands nowadays: Growth? Maturity? Or on the brink of decline?

A study commissioned by G+D Mobile Security titled "eSIM at an Inflection Point: Adoption poised to accelerate" has just been published by IDC. The research builds upon forecasts anticipating the internet of things (IoT) will require connectivity by the tens of billions to reach the conclusion that 14 billion devices will be connected to cellular networks by 2024.

IDC surveyed decision-makers at different steps in the value chain and reaches the conclusion that the eSIM is seen as having numerous advantages including the ability to support multiple connection profiles, enhanced security, space saving, better customer experience, a reduction of the total cost of ownership, the ability to reach devices that are not connected now, and physical reliability. On the other hand, some challenges are still to be addressed: consumer onboarding is to be simplified, risks of increasing churn for the MNOs, regulatory obstacles especially in China and Turkey. Over 70% of the study respondents already use eSIM-based solutions or plan to introduce them within the next two years and even 100% of MNOs either run or plan some eSIMs-related actions.

According to this research, the eSIM (or eUICC) is considered more attractive than all the “digital SIM” alternatives: the integrated UICC (iUICC), the embedded secure element (eSE), the trusted platform mobile (TPM), the trusted execution environment (TEE) and the SoftSIM. As it builds upon over thirty years of established records in terms of security, the eSIM appears as the most secure technology solution. The iUICC is seen as an interesting future alternative, especially for small, limited resources IoT devices, but the specification work is still ongoing and there are still some concerns in terms of securing and certifying its production process.

The eSIM brings not only authentication but is seen as opening new services including data encryption at the edge, device identity, user identity, data privacy, cloud security, application and data integrity. "The study clearly shows that eSIM technology acts as a central enabler of IoT and that the IoT ecosystem is gathering behind it. This is because it opens up numerous use cases as well as revenue streams going far beyond secure connectivity," says Carsten Ahrens, CEO of G+D Mobile Security.

While G&D is actively promoting the eSIM as a concept along with its solutions, other players do not stay at rest.

Thales just announced its eSIM technology is at the heart of Motorola’s RAZR, the company’s new ‘eSIM-only’ smartphone. The embedded SIM enables users to remotely provision and update their mobile network subscriptions that are securely stored in the eSIM. To support this ecosystem, more than 200 mobile operators in almost 90 countries across all continents have launched or plan to launch eSIM consumer services, according to Thales. Thales quotes Counterpoint Research: “More than 2.8 billion eSIM-compliant smartphones are expected to be cumulatively shipped between 2018 and 2025,” as well as ABI Research that anticipates “global shipments of eSIM enabled smartphones [will reach] over 225 million in 2020.”

The consensus now has it that the eSIM in an acceleration phase: it has been adopted by handset vendors and gets MNOs support at the same time and adopting the eSIM is bound to play an essential role in the IoT device and service expansion. In addition, the eSIM not only brings the same security as the SIM, but it also allows to drive additional security services.