Winners and losers in the eSIM battle

The eSIM has been around for a few years now. We all remember that during the eSIM (eUICC) standardization process, the handset vendors were actively pushing for the project while the mobile network operators were dragging their feet.

The evolution from the traditional SIM card to the eSIM can be seen as an adaptation to the realities of our always-connected always-on world. If we would build from scratch a mobile communication infrastructure nowadays, not many people would think of integrating a detachable piece of plastic and silicon to carry subscriber rights.

The first GSMA eSIM specification was published in 2010 and covered only M2M (machine-to-machine) use case. Consequently, the eSIM (or eUICC) is now a widely accepted reality for the IoT market, especially in the automotive, smart metering or a few other segments.

GSMA published its consumer eSIM specification in 2017. In the consumer market, there is an increasing number of smartphones, tablets and other devices embedding an eSIM while mobile network operators are increasingly supporting them. According to TCA (Trusted Connectivity Alliance, formerly known as SIMalliance), the Alliance members have reported 169 million eSIM shipments for 2019, a 50% year-on-year increase, while they estimate 5.05 billion SIMs were shipped worldwide during the same period. Now, 5G subscriber authentication has been specified as accepting equally removeable SIMs and embedded SIMs.

With the transition to eSIM, the remote SIM provisioning roles, namely the Subscription Manager Data Preparation (SM-DM) and the Subscription Manager Secure Routing (SM-SR), have been taken over by the traditional smart card manufacturers which have found there a means to develop new businesses while building upon their long-established relation with the mobile network operators. At the same time, the smart card vendors have also taken the role of eSIM OD developers, thanks to their accumulated experience in smart card OS development.

The evolution from the SIM to the eSIM has changed the secure transactions industry landscape:

· Semiconductor manufacturers are manufacturing significantly less chips than before,

· Smart card vendors are in a process to reduce, and eventually to end, their SIM manufacturing operations while they enter new businesses such as remote SIM provisioning,

· Handset vendors are undoubtedly the winners of the evolution as they capture more added value and improve their consumer relationship,

· MNOs are more and more reduced to the role of data pipes, and are in a process of redifining their consumer relationship,

· IoT managers benefit from easier management of their device fleets,

· Consumers can switch operators more easily.

The eSIM is on a path to global adoption. Already, as of January 2020, 108 MNOs, representing 25% of world connections, support eSIMs, according to GSMA Research. Also, the GSMA expects that in 2025, more than 60% of all smartphone unit sales will be eSIM-compatible and between 2 and 3 billion smartphone connections worldwide will use eSIM, China being the largest eSIM market, with half a billion eSIM smartphone connections

The next iteration is already on its way: SIM experts, typically the smart card vendors, are already working with the suppliers of baseband processors such as Qualcomm or Broadcom, to develop an iUICC: the implementation of SIM functions in the baseband processor, leading to the disappearing of the SIM chip altogether, a concept called the SoftSIM.

I have seen the beginning of the SIM : one of my first assignments in my career was to support the demonstration of SIM cards for roaming during Telecom Geneva in October 1991. Shall I witness the end of the SIM card before the end of my professional life?