Most smartphone manufacturers operating in the premium smartphone market and (Internet of Things) IoT device makers want people to move over to eSIMs for several reasons.
However, because of China, eSIMs have failed in the country.
eSIMs, or embedded SIMs, are digital versions of traditional SIM cards. Unlike physical SIM cards, e-SIMs are built into the device and can be programmed remotely. This technology offers several advantages.
Making a case for eSIMs
For consumers, eSIMs provide convenience, enabling users to switch carriers without needing a physical card. This can simplify international travel, as users can easily switch to local carriers.
Even in the IoT, eSIMs are particularly beneficial. They enable seamless connectivity for many devices, from smartwatches to industrial sensors, by allowing them to connect to cellular networks without needing physical SIM cards.
A great example would be how a major oil refinery in Assam quickly fixed leakages and prevented potential accidents thanks to several IoT devices equipped with eSIMs.
These devices sent real-time alerts to a centralized system, demonstrating the efficiency and safety benefits of eSIM technology.
Phone and device manufacturers are keen on promoting eSIM adoption because it simplifies the design and manufacturing process. Without a SIM card slot, devices can be more compact and water-resistant.
Moreover, e-SIMs facilitate a more streamlined customer experience, reducing barriers to switching carriers, which can foster competitive markets and potentially increase device sales.
Slow adoption and market challenges
Despite their advantages, eSIMs’ adoption in India could be faster. Experts attribute this to the Chinese government’s policy of restricting their use due to security concerns.
Apple offers eSIM capabilities across its entire iPhone range, and other brands like Samsung, Vivo, Oppo, and Xiaomi have started enabling eSIMs in their premium models.
However, these brands need more incentive to include eSIMs in their affordable phones since China, their primary market, does not permit their use.
This restriction prevents these brands from benefiting from economies of scale, as adding eSIM compatibility increases device production costs.
Telecommunication companies in India are advocating for eSIMs in affordable phones to reduce costs. However, in December, only about 10 percent of all smartphones sold in India supported eSIMs. Counterpoint Research shows this figure is expected to grow slowly to 20 percent over the next five years. In contrast, eSIM penetration in the US has reached 70 percent.
Globally, 400 out of 800 telecom operators provide eSIM coverage. Indian operators were among the first to offer this to 1.1 billion subscribers for IoT applications like cellular smartwatches and vehicle telematics.
However, handset manufacturers need to catch up. Besides Apple, Google, and Samsung, Chinese brands like Vivo, Oppo, and Xiaomi have only started to roll out eSIMs in their flagship models. Due to restrictions in the Chinese market, these manufacturers need more incentive to include eSIM support in the affordable segment.
The Future of eSIMs in India
Implementing eSIMs across affordable smartphones in India could increase production costs, as pointed out by Sachin Arora, head of connectivity and IoT for India at Giesecke+Devrient (G+D). However, as costs decrease and the supply chain improves, original equipment manufacturers (OEMs) may gradually adopt eSIMs.
Virtual SIMs would save telcos overhead costs related to manufacturing, supply chain management, distribution, and mobile number portability.
Virtual SIMs offer several advantages, such as using multiple mobile numbers on a single SIM and tracking stolen phones since eSIMs cannot be physically removed.
From a sustainability perspective, eSIMs reduce dependence on plastic cards. With around 1 billion mobile connections in India, of which 800-900 million are active, telecom operators utilize 400-500 million SIM cards annually. It will take at least 6-7 years for eSIMs to reach even half of that utilization.
