The rapid adoption of embedded SIMs (eSIMs) is on the verge of transforming the cellular IoT landscape, driving growth and market disruption. As the virtual version of conventional SIM cards, eSIMs present advantages such as operational efficiency, cost reduction and better security. As adoption of eSIMs gains traction, it is set to influence various facets of the cellular IoT ecosystem, reshaping market dynamics and contributing to the sustained expansion of cellular-based solutions within the enterprise IoT services sector, as per insights from GlobalData, a leading company in data and analytics.
In the realm of eSIMs, subscriber identification is transferred to an embedded universal integrated circuit card (eUICC). Serving as a software-centric solution, eSIMs are expected to leverage a new industry standard that facilitates remote programming and deployment. This adaptability enables device manufacturers, cellular operators, users, or third-party eSIM managers to seamlessly program devices for network operator switches, eliminating the necessity for physical SIM card replacements.
John Marcus, Senior Principal Analyst, Enterprise Technology and Services at GlobalData, says: “eSIMs have been around for a few years, but it is fair to say that before now there has been much more enthusiasm on the part of users and device makers than mobile network operators, which have viewed them as a threat. That is starting to change, following the publication of a new industry specification for IoT eSIM earlier this year.”
GlobalData analysis underscores numerous advantages associated with eSIM adoption in IoT, encompassing cost reductions for operators, device manufacturers and users, decreased hardware and operational expenditures, simplified installation and deployment processes, heightened flexibility, and improved security measures.
Marcus observes: “While eSIM represents nothing but upside for manufacturers of IoT devices and connected products, the trend is likely to impact—one way or another—all areas of the cellular IoT ecosystem.”
According to GlobalData’s latest forecast, cellular-based solutions are anticipated to maintain their dominance in the enterprise IoT services market projecting a growth rate slightly higher that the overall market at a 17.3% Compound Annual Growth Rate (CAGR) through 2027. eSIM adoption is identified as the driving force behind this growth, along with transitions from 2G-3G switch offs, the adoption of 5G, and the uptake of private cellular connectivity.
The report highlights the GSMA’s new eSIM specification, SGP.32, tailored explicitly for IoT. This specification supersedes the outdated M2M eSIM standard, offering simplified remote provisioning through an IoT Manager module and an embedded IoT Provisioning Assistant. The SGP.32 ‘s automated profile switching abilities confer several advantages for OEMs (Original Equipment Manufacturers) and users, including heightened flexibility, lower costs, longer lifespan, and benefits for device makers, fostering global product development.
Marcus concludes: “In addition to the positive implications of automated profile switching enabled by the standard, it brings challenges such as the potential for increased competition for IoT service providers and a shift in control dynamics among the operator, SIM, and device.”
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