#1 - What is the current state of the eSIM market? Where is it heading next?

The eSIM (embedded SIM) has already made a significant impact in both the consumer and IoT (Internet of Things) markets. However, over the next 18 months to two years, we’ll see a real step change in momentum. This will encompass not just the sheer volume of eSIM-enabled products being launched, but the variety of devices involved. Numerous different smartphones, tablets, laptops, wearables and other consumer products featuring an eSIM will be introduced, along with a diverse array of IoT devices. 

Last year, Thales commissioned Mobile World Live to survey device makers to find out more about their plans. The results show that 74% of smartphone OEMs (Original Equipment Manufacturers) and ODMs (Original Device Manufacturers) that do not currently offer eSIM devices plan to do so in the next two years. What’s more, nearly 64% of smartphone OEMs and ODMs expect between 25% and 75% of their product portfolio to include an eSIM over the same period.

Looking beyond the smartphone, the Mobile World Live survey found that 70% of IoT OEMs that do not already sell eSIM devices plan to do so in the next two years. In addition, 39% of laptop and tablet OEMs expect over 75% of their products to be eSIM-enabled in the next three years.
 

#2 - What can we expect in terms of eSIM-only devices?

Apple’s decision to launch its US iPhone 14 and 15 models without a removeable SIM slot was a turning point for the eSIM ecosystem. In the US at least, mobile operators that want to support the latest models from the world’s second largest smartphone manufacturer need to embrace the eSIM.

Even more significantly, Apple was clearly signposting its direction of travel. Reflecting this, the company recently announced that eSIM-only iPads are being launched everywhere in the world, with the exception of China. 

Other smartphone OEMs were bound to follow in Apple’s footsteps, and the Mobile World Live survey points to a significant uptick in the near future: 53% of smartphone OEMs and ODMs plan to develop an eSIM-only product within two years. 

 

#3 - How are MNOs responding?

 Nearly 400 MNOs (Mobile Network Operators) worldwide supported eSIM connectivity as of June 2023, according to the GSMA. Given the stellar growth predicted for eSIM-enabled devices, we’ll undoubtedly see many more operators added to that list. Indeed, Thales is working with numerous MNOs to enable them to provide outstanding eSIM connectivity services. But while many progressive MNOs are now working hard to promote the benefits of the eSIM – and take advantage of the commercial opportunities on offer – we believe there is huge potential for more operators to do the same. These MNOs should look beyond simply providing the technical means to support the eSIM, and develop marketing strategies dedicated to this transformative technology.

 

#4 - What strategies are MNOs adopting?  How are operators promoting the benefits of an eSIM-based customer journey? Are eSIM-first strategies being pursued?

Working with MNOs around the world, we’re seeing an ever growing number of innovative and effective strategies being rolled out to promote eSIM connectivity to end users. Operators are using a range of incentives to encourage a switch from removeable SIM to eSIM in devices that support both solutions, including offering it free. Some operators are complementing these promotions with educational and informative campaigns that spell out the benefits of the eSIM via social media and websites. Operators are also beginning to take advantage of the unique characteristics of the eSIM in their promotions. For example, mobile operators can leverage the ability to activate multiple eSIM subscriptions simultaneously to launch ‘Family and Friends’ type bundles. 

There is massive scope for more operators to adopt these and other best practices and build a distinct brand offer around the eSIM. However, according to the Mobile World Live survey, only 20% of smartphone OEMs and ODMs have full visibility on how their devices are used in the market; greater insight would probably boost the pace of deployment and enable OEMs to fine-tune their products for the eSIM ecosystem. 

While 40% of consumers are aware of the eSIM, only 11% heard about it via a mobile operator, according to research by the GSMA.  These findings underscore the untapped potential of the eSIM. By boosting awareness of the eSIM among consumers, MNOs will accelerate adoption.    

 

#5 - What are the successful eSIM-based use cases and promotions?

Historically, mobile operators have expected customers to buy a subscription before they’ve experienced their mobile network service. But the eSIM can turn this on its head, by offering far greater flexibility and convenience via a fully digital experience. On-boarding a subscriber is easy and there’s no need to change provider. 

Several mobile operators are taking advantage of the eSIM’s greater flexibility by running novel ‘Try before you buy’ promotions.  Customers can ‘test drive’ a mobile network via their device’s eSIM, without having to cancel their existing subscription. As a result, MNOs can boost customer acquisition and maximise their conversion rates through a simple and seamless experience. One mobile operator has reported a 40% conversion rate using the ‘Try before you buy’ approach. 

Another successful use case is eSIM for Travel. Many MNOs are launching eSIM prepaid offers to provide connectivity to tourists visiting their country or region. Marketed through travel agencies and airports, as well as the MNO’s app and website, eSIM-based packages enable customers to buy connectivity and data at local rates before they depart for another country. That means travellers avoid the hassle of queuing at retail stores for prepaid connectivity after arriving at their destination. They also enjoy the cost savings and optimum experience provided by local connectivity. 

 

#6 - Overall, how should operators prepare for the eSIM revolution?  

MNOs should identify and implement a strategy that is specific to the eSIM. Rapid adoption of the eSIM is creating compelling new opportunities for operators to differentiate, build additional revenue streams, and enhance the user experience. Above all else, the eSIM provides MNOs with the platform to create a seamless experience at every stage of the subscriber lifecycle. At the front end, this means providing the best possible user experience, including a smooth, fully digital onboarding process and a simpler customer journey. Giving staff the right training will further boost customer care. At the back end, the eSIM again enables simpler and more cost effective processes. In particular, as MNOs deal with higher volumes of eSIM activations, as well as the growing diversity of both consumer and IoT devices running on 4G and 5G networks, managing subscription profile inventories will be mission critical in terms of maintaining service continuity and the user experience

Thales is at the heart of this new eSIM ecosystem. By sharing our expertise and experience of best practices we can help mobile operators to make the most of a new era in connectivity. Over 450 MNOs worldwide use our solutions, and we have strong relationships with over 100 OEMs in the consumer and IoT markets. This presence enables Thales to provide comprehensive solutions for all the key stakeholders.