With Apple’s recent iPhone 14 announcement signalling massive growth in consumer embedded SIM (eSIM) adoption, Thomas Larsson, the director of strategic product management at Giesecke+Devrient (G+D), tells IoT Now that both the consumer and enterprise market are in the prime eSIM era. Larsson invented the eSIM and founded the company’s eSIM concept and business in 2009. He has a background in telecoms, mainly focusing on eSIM and IoT.
With the US market leading adoption and forcing consumer uptake of eSIM technology, the benefits of combining remote eSIM management with flexible global connectivity have become so clear that the rest of the world will follow rapidly, Larsson says. To simplify and further accelerate eSIM adoption in the enterprise market, G+D’s acquisition of Pod Group in 2021 has created a combined offering that brings together G+D’s eSIM management and security capabilities with Pod Group’s global connectivity expertise. The companies aim to bring eSIM to all sizes of enterprises and IoT deployments, eradicating complexity, increasing choice, strengthening security and reducing costs.
IoT Now: What are the challenges eSIM faces as it encourages replacement of the traditional removable plastic SIM? Are you seeing reluctance from mobile operators to embrace the technology?
Thomas Larsson: We’re now entering the eSIM prime era in which operators are beginning to focus on eSIM delivery over removable SIM cards. We’re past the stage where we’re fighting against mobile network operators (MNOs) that are scared eSIM presents a threat to their ownership of customers or to their revenues. Instead, we see MNOs and MVNOs, especially those who are newer and have less limiting legacy, supporting consumer eSIM because of its very attractive digitalised business model. It is now widely accepted that eSIM and eSIM enabled devices are here and MNOs are looking to take advantage of the opportunities it offers.
On the enterprise IoT side, the eSIM benefits have been more of a no-brainer: the use of eSIM-capable embedded SIM in IoT enables more cellular connected IoT devices and use cases. The enterprise benefits from more cost-efficient, manageable devices and connectivity, and the MNO benefits from more connected devices. The limiting factor for eSIM in IoT has historically been the need for eSIM infrastructure investments only compatible with M2M standards, making eSIM only practical for larger projects like in automotive and large MNOs/MVNOs. With the imminent introduction of IoT eSIM standards capable of reusing the widely deployed consumer eSIM infrastructure, while supporting IoT use cases like remote control, this limitation will disappear.
IoT Now: What is G+D’s role in making eSIM a mass-market reality?
TL: It’s not so much about what we can do but more about enabling something that was impossible before. What has made us successful so far is that we’re delivering hardware to original equipment manufacturers (OEMs) very early on in the process. We have delivered embedded OS to chips in devices in factories and are able to linkthe whole ecosystem end-to-end to the MNOs. Our proactive efforts in standardisation have provided a fundamental cross-industry acceptance. In addition, our legacy of security which has a very long heritage means the industry has a very high level of trust in us.
We provided both the world’s first commercial SIM and the first eSIM management system and we’re the global leader in embedded operating systems (eOS) with nearly 500 million licences delivered for consumer devices. We’re also the global leader in remote lifecycle management with one billion mobile devices managed globally and our systems manage three billion SIM cards in more than 80 countries.
Our background means we understand what is needed to make eSIM successful. Our 99.99% server availability for downloads, for example, makes G+D’s eSIM management system the most reliable in the market. This is borne out by the fact that more than 250 MNOs use our eSIM offering and 80% of the top ten car manufacturers trust our connected car solutions. Apple, BMW and Deutsche Messe are among our customer references and G+D has been recognised by Kaleido Intelligence as the number one vendor for eSIM management while Pod Group, which we acquired in 2021, has been recognised by the research firm as a Kaleido High Flyer in IoT SIM connectivity.
IoT Now: With Apple’s reinforced commitment to eSIM with the newly-launched iPhone 14, is it accurate to state that consumer eSIM challenges have been addressed and eSIM is now the prime SIM option in the consumer market?
TL: The benefits are certainly well understood and G+D and others have done a lot of work over the last decade to ensure standards are in place to support mass market adoption. Without these it is impossible to achieve widespread device and consumer adoption. There are still challenges to overcome and to an extent there is a chicken-and-egg problem to work through. Common obstructions originating at MNOs include: eSIM management solutions are implemented by many MNOs but they are not actively promoted, MNOs that have not changed their back-ends to fully digitise eSIM processes can’t realize the full potential of eSIM and in some markets there are simply not enough eSIM enabled or eSIM-only devices to motivate or promote the use of eSIM. One must keep in mind that established MNOs still need to support removable SIM cards in parallel for a long time.
Many device manufacturers are also in a wait-and-see mode. They appreciate the value that eSIM brings to their device, but are reluctant to give up on the globally supported removable SIM card just yet, usually resulting in more costly dual capability devices. However, besides a variety of eSIM-only wearables from various vendors, Apple is now paving the way by launching an eSIM-only mainstream smartphone that will force an entire market to go eSIM prime.
Subscribers also remain unaware of the benefits because of lack of promotion, and they do not see the benefits of eSIM because most MNOs have not made use of the full potential of eSIM yet. Announcements like Apple’s help boost the profile of eSIM and create expectation for its availability, we believe momentum is building and the benefits are crystalising for both consumers and MNOs.
IoT Now: How do you see consumer eSIM capabilities feeding through into use cases?
TL: eSIM allows MNOs to implement fully digital user journeys and processes which will save them money once eSIM market share overtakes removable SIMs and provides consumers with easier new journeys that they will love. These fully digital user journeys ease the onboarding and customer acquisition process and new business opportunities will be possible because of fully digital processes.
Use cases such as try and buy offerings will be possible. A customer could be encouraged to test an MNO’s 5G network for a week, for example, or travellers could be offered a local deal. New digital sales channels open up in airports, hotels, trains and ships offering event-based connectivity and the possibility to easily connect additional devices such as trackers, toys or cameras. This will all be fast and easy without lengthy or expensive contracts but often this will generate revenue that didn’t previously exist.
MNO churn will be defined by the MNOs’ retention strategies, their customer service, their reliability and the quality of service and personalisation they offer. We do not believe the eSIM will increase churn because it helps MNOs keep their customers, fosters the development of new, innovative consumer devices and attracts customers in a user-friendly way. Why would someone who has, for example, used an MNO-app to add eSIM contracts to several family members’ phones and devices want to churn suddenly?
IoT Now: Turning to the enterprise market, what do you see as the key drivers for greater adoption of eSIM in IoT?
TL: In IoT, the challenges of removable SIMs are drivers for eSIM adoption. Aspects such as the form factor of removable SIMs and the cost of adding even a SIM tray to an IoT device are important considerations. Add to these, physical security issues and the need for devices to withstand extreme weather or industrial conditions and it’s clear that a SIM slot is both a point of weakness and a cause of additional cost.
The need for physical insertion of SIMs increases the costs of managing remote devices in the field and even the logistics and supply chain costs of inserting SIMs in factories are substantial. This causes unnecessary complexity by requiring regional or national versions of products because the SIM is embedded in the factory which results in multiple stock-keeping unit (SKU) numbers per product that have to be managed, creating complicated inventory requirements.
Beyond the operational challenges, there are also connectivity challenges to take into account. Global roll-outs require multiple operator agreements and platforms to be adopted and inflexibility is inherent to this structure. If you want to change operator, you have to change SIM card and the cost of this can be prohibitive, resulting in vendor lock-in. This means that deployments can be subject to higher roaming costs and enterprises cannot easily change provider if they need better network coverage or want to adopt a lower priced solution from a rival. Don’t forget that in contrast to consumer mobile phones, IoT devices have a typical lifespan of five-to-ten years so the freedom to change or leave an MNO contributes significantly to device performance and profitability.
In contrast, eSIM is a factory-friendly technology that enables single SKU products that can be localised over-the-air (OTA) at the point of deployment. With the SIM embedded, devices are harder to tamper with and better protected from environmental factors, because there is no SIM slot. In addition, devices can be smaller and cheaper because they do not need to accommodate a removable SIM.
Operationally, totally remote management is central to eSIM’s value. This is done over one platform with multiple network profiles on a single SIM so it can connect wherever it is deployed. This results in cost efficiencies and future-proofing for all IoT devices. Customised combinations of native and roaming networks are possible and the connectivity can be updated remotely as market conditions or pricing change.
IoT Now: You mentioned earlier that G+D acquired Pod Group last year. Why did you make the acquisition and what innovations have you made as a result of combining the two companies’ capabilities?
TL: Pod Group has more than 20 years of experience in implementing IoT connectivity solutions as an enterprise network operator (ENO) offering customised solutions to give enterprises of all sizes control of their IoT connectivity. The company has access to more than 600 networks in 185 countries so it is ideally placed to offer optimised connectivity to customers. G+D has almost 170 years of experience addressing the trust and security of physical and digital assets so offering a combined eSIM and connectivity enablement proposition is a logical step.
We’re now able to bring these capabilities together into Pod Group’s ENO ONE IoT connectivity offering which comprises a broad range of global eSIM profiles, including native, roaming and private networks, which can be combined with specialised SIM applets to increase security and ease provisioning. Profiles can be swapped OTA and everything is managed remotely via a centralised platform. Offering this through a single supplier simplifies the IoT supply chain and reduces complexity for entrants into IoT in particular. Enterprises typically want to bring IoT-enabled offerings to market with as much flexibility and as little complexity as possible so they can minimise costs and the management burden while accelerating time to market. Being able to access multiple MNOs and have a single SKU device radically streamlines and economises IoT entry and enables enterprises to optimise their device connectivity right out of the box.
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