Global adoption of eSIM is increasing rapidly, across both primary and secondary consumer devices, and throughout various industries leveraging its advantages in internet-of-things (IoT) devices.
And since the release of the eSIM-only iPhone, the consumer eSIM market has been on a steep rise, with over 100% annual growth in eSIM user profile downloads in the last two years.
That recent popularity of eSIM, alongside projections for further adoption in the coming years, presents a great opportunity for MVNOs that are quick to embrace this trend.
But despite some early activity, there’s still a great deal of unrealised potential for MVNOs to capitalise on with regard to eSIM.
What trends are behind eSIM growth and investment?
Consumers have been playing a key role in the significant growth of eSIM in recent times, according to Ankit Malhotra, Senior Research Analyst at Counterpoint Technology Market Research.
Ankit said, “We’ve seen a great increase in eSIM adoption over the past two to three years. If we look at the number of devices that carry eSIM, that was more than 400 million last year, which showed a growth of 3%. And if we compare that to the overall cellular devices in the industry, which saw a decline, that acts as significant growth because the penetration of devices carrying eSIM is increasing.”
“The number of operators who are supporting eSIM has also grown a lot in the last two years. And now
more than 400 operators across over 110 countries support eSIM.”
Where is this primarily taking place?
Well, North America and Western Europe are currently leading the way, which is attributed to the
popularity of eSIM-enabled devices. Still, the rest of the world is set to catch up very quickly, as popularity continues to rise and new use cases emerge.
But the most significant metric for MVNOs to consider regarding the opportunity with eSIM is in the growth of consumer transactions and profile downloads.
Ankit added, “The real growth is happening in eSIM transactions. If we look at devices, there were lots of devices that had eSIM. For example, some consumers who bought an iPhone in 2019 or 2020 may not have been using their eSIM.”
“But what has changed over the last two years, especially after the launch of the eSIM-only iPhone, is the number of eSIM profile downloads has increased and almost doubled in 2023. That, we believe, is the true indicator of the growing impact of eSIM in the industry.”
Market adoption and growth trends between 2018 and 2023 have developed as follows:
● eSIM-enabled device shipments – Around 400 million, for year-on-year growth of 3%
● Number of operators supporting eSIM – Year-on-year growth of 55%
● eSIM profile downloads – Year-on-year growth of 103%
More devices are driving eSIM growth
While network operators and MVNOs alike have been cautious about challenges with eSIM, such as the costs of eSIM-enabled devices, and limited device options, the technology will become far more
pervasive over the next few years.
As consumer adoption drives demand, more and more devices are now being manufactured to be
compatible with eSIM. In fact, Ankit expects that more than 3 billion consumer eSIM-enabled devices will be shipped by 2030.
But eSIM growth isn’t just projected in predictable form factors like smartphones and tablets. It’s also spreading through devices like smartwatches, and across industries where use cases include IoT applications within automotive, healthcare, agriculture, and many more.
Over 35% of operators globally are now offering eSIM support for watches and tablets, and more than 40 types of devices are now eSIM-compatible.
Crucially, though, all major device manufacturers are now making eSIM-enabled devices more affordable, so consumers can expect to see vastly more eSIM-enabled smartphones. More specifically, Ankit expects around 1.8 billion smartphones to be equipped with eSIM by 2030.
And Ankit mentioned that eSIM-enabled consumer devices installed base (units) by 2030 is projected to be:
● Smartphones – 1,800 million
● Laptops – 180 million
● Tablets – 160 million
● Smartwatches –150 million.
Travel is a key use case for eSIM
A key use case influencing that introduction of eSIM into more devices is with users who are travelling internationally, due to the convenience, cost efficiency, and instant connectivity it provides.
“Travel is a very big use case for eSIM. We believe it will continue to grow,” said Ankit. “The convenience of using eSIM for travel cannot be denied. The days where people would go to a physical store when landing in a new country and buying a physical SIM will soon be gone.”
eSIM and IoT are in alignment
The growth of IoT applications is also contributing significantly to the overall growth of the market
because eSIM effectively addresses permanent roaming restrictions. The continued growth of eSIM in IoT will likely be driven by applications such as fixed wireless access (FWA), asset trackers, telematics, and point-of-sale (POS).
Ankit said, “IoT also has a lot of use cases for eSIM, providing connectivity wherever is needed and
without changing profiles. We believe by 2030 there will be 2.2 billion IoT connections with eSIM, and the industrial segment will be the biggest beneficiary of this growth. Right now, this is around 200 million, but it will grow at a CAGR of 43% over the next seven years.”
But there are challenges to be broached for MVNOs pursuing the IoT space when it comes to eSIM,
particularly with the introduction of new platforms. Ankit was able to provide some valuable advice on this.
He explained, “If anyone has been following the eSIM industry, one of the biggest buzzwords over the last two years has been SGP 31 and 32. Which, in basic terms, means using the SMDB+ for IoT use cases. This is a very interesting development, and the response from eSIM suppliers and vendors has been very positive.”
So, how should operators go about implementing this?
Ankit said, “Initially, we’re hearing from operators that they are still unsure how to navigate this move from the current to new platforms, and that’s for multiple reasons.”
“Firstly, many operators have defined business units differently for consumers and for IoT, and they’re still deciding whether to integrate them or use it as one, but that’s still taking place.”
“Also, the test specifications are out, but operators are still waiting for the correct specifications.”
Strategic guidance for MVNOs and operators to succeed with eSIM
So, for MVNOs looking to take advantage of the opportunities presented by the rapid growth of eSIM,
what are the strategic steps that should be taken?
Ankit recommends the following approach:
1. Invest in building consumer awareness and education in markets and regions that are lagging
behind Western Europe and North America in regard to eSIM adoption.
2. Streamline eSIM activation, customer onboarding, and lifecycle management to ease consumer
concerns about availability and ease-of-use.
3. Expand eSIM infrastructure to accommodate and maximise the opportunity with this new trend.
4. Target new market segments, and don’t just focus on smartphones. Also consider less common
devices and use cases.
Ankit also offered some advice specifically for operators:
1. Strengthen partnerships with device manufacturers to improve eSIM offerings.
2. Be ambitious, and take calculated risks, in developing attractive plans to win new customers,
such as multi-device plans, try-and-buy incentives, and so on.
Key takeaways
The opportunity with eSIM is very exciting for MVNOs, and the significant growth in popularity is strong evidence that this will be an opportunity worth pursuing.
With the existing traction we’ve seen already, and even more projected growth for the near-future,
MVNOs that can capitalise early have a lot to gain.