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SIM growth fuelled by healthy fundamentals

Week 17, 2008

Smart cards are present in every mobile communication standard, and could find an even more central place with a convergence between mobile communication and WiMax.

For the time being, the industry enjoys positive results even in times of a global crisis. The SIMalliance just announced the total available market for SIM cards reached 2.7 billion units in 2007. And the growth is expected to continue as the 3 billion mark is to be passed in 2008. We also learned recently that the GSMA estimates there are now more than 3 billion GSM users.

Of course these figures are far from being a coincidence. But, we all know there is no direct and easy relation between different market indicators: the number of subscribers, the number of handsets and the number of SIMs. Some non-GSM handsets have SIMs, like CDMA handsets in China, in some countries churn rates are very high, triggering a higher consumption of SIMs, etc. Also in some cases users switch to a new handset without getting a new SIM card from their operator, or they switch to a new SIM card to subscribe to new services but keep the same handset.

From the smart card industry point of view, announcements that number portability will commence in Singapore later this quarter, and probably in India next year is good news. When numbers are not 'portable', many users are potential churners, dissatisfied with their current mobile network operators, but don't switch because they want to avoid the hassle of having a new phone number. When number portability is announced, these users create an inventory of switchers. And when number portability is enforced, they switch to a new operator, creating a churn peak, thus a SIM card consumption peak.

Even if correctly evaluating SIM market vs. subscriber numbers and handset sales remain a quite difficult task, we all agree on the fact our industry is growing and based on healthy fundamentals.

Thierry Spanjaard
Chief Editor
Smart Insights