Smartphones, B2B IoT to increase shipments of eSIM-based products by 2025

  • Counterpoint Research predicts that eSIM capable PCs and B2B IoT devices to exhibit CAGRs of 75 percent and 40 percent respectively over the next five years.
  • Smartphones will remain among the key drivers for the adoption of eSIM technology and contribute almost half of the global eSIM capable device shipments in 2025.

We all are familiar with SIM card technology that is there in our cell phones since the nineties. e-SIM, which is the upgraded version of the existing SIM card, has been developed by telecom trade body GSMA. The biggest advantage of this technology is that it helps users to change operators directly from their phones from any place, without physically visiting the store. The eSIM can be used in any device that requires connectivity. Global operators such as Bell, Vodafone, Airtel, etc. are supporting eSIM and the analysts speculate that more operators will use this technology in the coming few years. 

A new survey by Counterpoint’s ETO (Emerging Technology Opportunities) Service claims that more than than 6 billion eSIM (eUICC and iUICC-based) capable devices will be shipped by the end of 2025. The eSIM uptake is poised to grow across a gamut of connected devices over the next decade, thanks to the flexibility, cost efficiency, security and other myriad benefits offered by the technology.

Senior analyst Karan Dasaor said, “Apple introduced the eSIM technology two years ago with the iPhone XS and since then all the iPhones have been compatible with eSIM. Google and Samsung are the key vendors driving eSIM adoption in Android smartphones. The growth of 5G is going to promote novel device form-factors such as foldable and newer business models.”

He added that the scenario is driven by eSIM adoption as shown by the Moto Razr (2020), the world’s first eSIM-only model, and eSIM-only smartphone portfolio launched by new generation mobile operator Rakuten. Going forward, smartphones will remain among the key drivers for the adoption of eSIM technology and contribute almost half of the global eSIM capable device shipments in 2025.

In fact, the IoT-based devices and modules have also seen significant adoption of eSIM, driven by eSIM standardization requirements for M2M/IoT devices. The current eSIM adoption, as well as activation rates in cellular B2B IoT, are much higher than consumer IoT, as devices are often in difficult places to reach physically, making eSIM a must.

The low revenue per connection also works against physical provisioning. Going forward, LPWA technologies (LTE-M and NB-IoT) will be key drivers for cellular IoT devices at a mass-market scale for things and assets which were never connected before.

Further, Microsoft, Intel, and Qualcomm have been focusing on ‘Always Connected PCs’ supporting natively integrated eSIM and LTE modems. Several LTE PCs have already been launched, with eSIM appearing in many SKUs. With 5G likely to reach the mass market in the future, cellular connectivity will become a standard for laptops and those without it will slip towards a minority.

Highlighting eSIM penetration, Research vice president Neil Shah said, “Smartwatch and automotive are among the segments which have seen the highest adoption of eSIM so far. Smartwatch-makers have been increasingly adding cellular connectivity for varied use-cases, from health monitoring and safety tracking to making them standalone companion devices. Further, eSIM is a natural fit from the integrated form-factor and space-saving and ruggedized design perspectives. Apple, Samsung, BBK, Huawei and others have adopted eSIM for their cellular models.”

Both eUICC (hardware-based eSIM) and iUICC (software integrated eSIM or iSIM) form-factors will co-exist and grow depending on the preference of MNOs and device and module makers. So far, eUICC has been the go-to standard for eSIM implementation. However, iUICC capable devices’ growth is expected to outstrip eSIM devices’ growth with the former growing at a CAGR of around 290% over the next five years.

Counterpoint speculate that the iUICC-based eSIM to become quite popular among Chinese smartphone brands, as they move from less secure TEE-based virtual/soft SIM to a more robust iSIM solution. Further, players such as Apple and Samsung will also be looking to offer an option to replace hardware eSIM with iSIM if it meets GSMA’s secure element specifications, as it is critical for operator-driven Western markets.

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