eSIM is one of the key topics for MVNOs, as the technology enables them and other players in this ecosystem to develop innovative customer propositions and business models.
Since its introduction, eSIM technology has undergone significant developments. Pablo Iacopino, Head of Research and Commercial Content at GSMA Intelligence, shared an analyst’s perspective on the eSIM market, highlighting its current state, recent advancements, the trends driving its growth and innovation, and the broader implications for MVNOs.
The evolution of eSIM
eSIM technology has been in existence for over a decade and has evolved through several distinct phases:
Early Days: Establishing the foundation for eSIM adoption
Initial Adoption: Early market take-up began to emerge
Acceleration: The pace of adoption and innovation increased significantly
Scale: The current phase, where eSIM is scaling up, unlocking new opportunities across the industry while delivering significant benefits for both consumers and enterprises.
When discussing eSIM, it is important to differentiate between two distinct markets: the consumer market and the enterprise sector, as each operates with unique market dynamics.
eSIM in the consumer market
Device compatibility
Pablo Iacopino - GSMA Intelligence (PI): “At GSMA, we track various metrics on the eSIM market. Starting with the commercial availability of eSIM devices, there’s been impressive progress over the last five years. The number of consumer devices supporting eSIM has grown tenfold, reaching 271 million devices by June 2024. Of these, 63% are smartphones - signifying strong progress in flagship smartphones, though availability beyond high-end models remains limited. This is an area we need to improve to scale eSIM adoption.”
Adoption by country
The GSMA Intelligence also tracked the number of countries that have launched commercial eSIM services for smartphones (excluding international roaming). As of June 2024, they found that more than 120 countries offer eSIM services for domestic consumers, making it widely available worldwide. However, China remains an exception, where eSIM services are available for wearables and some IoT applications but not yet for smartphones.
What is interesting is that Africa is quickly catching up, with many of the new countries launching eSIM for the first time.
Operators’ approach
There has been significant growth in eSIM, and a major turning point for all players came in September 2022, when Apple launched eSIM-only smartphones in the US. This decision acted as a catalyst for the industry, accelerating the commercial availability of eSIM and the launch of related services globally.
PI: “When we talk about MVNOs, they are doing an excellent job driving eSIM adoption for international roaming. On the other hand, MNOs are launching eSIM services but aren't promoting them to their customers. Our survey found that only 8% of consumers who knew about eSIM discovered the technology because their MNO reached out to inform them. This is a very low percentage.”
However, things are beginning to change. More and more operators are adopting an "eSIM first" approach, prioritising new customers for eSIM during the onboarding process. Progress remains slow but is steadily improving.
Meanwhile, MVNOs are leveraging eSIM to introduce new business models. Emerging propositions and innovative consumer models are appearing worldwide, such as digital brands and new eSIM concepts for markets like prepaid, as well as integrating eSIM with 5G and roaming services. Currently, roaming remains the most successful use case for eSIM in the consumer market.
It is worth mentioning that the GSMA’s data was based on a consumer survey conducted across 11 countries. The picture will continue to change.
Consumer awareness
Consumer awareness of eSIM currently stands at 50%, meaning only half of consumers know what eSIM is. There is still work to be done to educate customers, but this marks a significant improvement compared to two years ago when awareness was just 25%.
PI: “When we asked consumers about their interest in using eSIM on smartphones, the response was also split - 50% expressed interest. We also tracked the use of eSIM for international roaming. We asked consumers if they had travelled abroad in the past year and, if so, whether they used eSIM. Among those who were aware of eSIM, 3% had used an MVNO's eSIM service while travelling abroad. While 3% might seem small, it’s noteworthy because it represents a new technology being adopted for international roaming. Even a small percentage translates to a large number of people when considering the total consumer base.”
Pablo observed that the transition from removable SIMs to eSIM has been slower than expected but anticipates acceleration in the coming years. Currently, the US leads the way with 30% penetration, primarily due to eSIM’s exclusive availability in that market. In other countries, including Europe, eSIM penetration remains very low - between 0% and 5%. He highlighted that, globally, it is expected that by 2028, half of all smartphone connections will be using eSIM.
eSIM in the IoT enterprise market
Now, let’s look at eSIM for IoT and enterprise markets. eSIM is a key enabler of IoT deployments, but its adoption remains low compared to its long-term potential.
Market adoption
Based on our enterprise survey of over 4,000 companies across 21 countries and 10 sectors, the top five industries driving future eSIM demand are:
Manufacturing
Media and entertainment
Transportation
Automotive
Utilities and energy
Pablo observes that eSIM has already become mainstream in the automotive sector. However, outside the automotive industry, eSIM adoption remains limited to isolated initiatives rather than widespread deployments. Sectors such as healthcare, retail, and logistics have some eSIM use cases, but sector-wide adoption is still in its early stages.
Key challenges
When enterprises were asked about the challenges they face when adopting eSIM technology, they highlighted:
Cost of implementation: This is the top challenge across all countries and sectors
Integration: Difficulty in integrating eSIM with existing technologies
Lack of standardisation: The market still includes both standard global solutions and proprietary solutions, creating confusion for enterprises about which path to take
Key benefits
Despite these challenges, enterprises identify significant benefits from adopting eSIM. The two primary benefits are:
Security: eSIM offers better security compared to Wi-Fi
Scalability: eSIM enables easier scaling of IoT deployments
How to scale eSIM adoption in the IoT market and move from isolated initiatives to mainstream usage?
Pablo suggests that four key trends should accelerate eSIM adoption in IoT:
New specifications and technologies: This includes RedCap (for reduced capacity devices) and satellite integration, which combines satellite and cellular connectivity. It is important to mention SGP.32, which marked a significant milestone for eSIM in IoT, with further improvements expected in SGP.33 in January 2025
New IoT devices: Vendors are developing eSIM-enabled devices that offer scalability and global coverage
Private networks: The growing adoption of private networks represents an incremental use case for eSIM
Sustainability: eSIM can support sustainability efforts in IoT
Looking at the potential for eSIM in IoT, it is expected that the global number of IoT cellular connections will grow from 4 billion today to 6 billion by 2030. eSIM is projected to represent 40% of this market, with integrated SIM accounting for 34% and traditional removable SIMs making up 24%. This includes some overlap between integrated SIM and eSIM, as integrated SIM also encompasses EU ICC.
What to look out for
PI: “In my opinion, the next game-changer for consumer eSIM will occur when Apple adopts eSIM-only in Europe and the Asia-Pacific region. While the timeline remains unclear, it's something to watch closely.
Regarding IoT and enterprise: From our survey, one of the most notable findings is that enterprises are expected to allocate 10% of their revenues to digital transformation over the next six years. Of this, 13% will be spent on mobile connectivity, and 8% will go towards IoT.
This presents a significant opportunity for MVNOs to capture a share of this spending. Additionally, the survey reveals that 7% of enterprises are already working with MVNOs. While this number might appear small, considering the global scale of enterprises, 7% of a large figure is substantial, highlighting room for growth.”
Key takeaways: For the consumer market, opportunities lie in developing new consumer propositions, particularly through eSIM-only and eSIM-first strategies. In the IoT enterprise sector, MVNOs and operators should prioritise demonstrating how their IoT solutions can help enterprises address deployment challenges. A significant hurdle is technology integration, as many enterprises struggle to seamlessly integrate eSIM, AI, IoT, and cloud security. Providing solutions that simplify this integration will offer a strong competitive edge.