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How eSIM will shape the future for MNOs
Revolutions are transformative, unpredictable, and full of possibilities. If something threatens the status quo, new opportunities are sure to appear, to be seized by those visionaries and trailblazers with the foresight to break new ground.
When a major technological advancement looks set to disrupt a settled industry, it's nothing but good news for those who are willing to take the lead. Those with foresight and ambition can define what the future will look like – and who the beneficiaries are.
The embedded SIM chip – eSIM, for short – is exactly the kind of game-changing development that could reshape the mobile industry. The impact of this new technology will be felt by everyone involved, from consumers to chipset manufacturers, and everyone in between.
It's no longer a matter of if eSIM catches on. It's a question of when, and of who is best placed to take advantage of it.
An eSIM is a rewritable chip, soldered directly onto a device's motherboard. Essentially, it makes the removable SIM cards we use today obsolete. With an eSIM, plans and contracts are downloaded directly, so connecting your device and getting online can take literally seconds once you've bought your device. This saves time for consumers and opens up a variety of possibilities for everyone else in the value chain.
One group starting to take eSIM seriously are the mobile network operators (MNOs) and mobile virtual network operators (MVNOs). According to a recent study by ROCCO, 80% of MNOs see eSIM as a likely replacement for the removable SIM card. As a result, more than 20% are keen to develop new eSIM-related projects, with the intention of bringing them to market.
So why are operators starting to line up behind eSIM?
There are a range of specific benefits that MNOs and MVNOs are going to enjoy as eSIM becomes increasingly popular. One major driver is the potential for new and dynamic partnerships within the manufacturing chain itself.
In an industry where connectivity is key, separation and isolation are still all too common. But there's no reason why MNOs can't form more profitable and fruitful bonds with other essential industry elements, from OEMs and ODMs to fabless chipset manufactures and software designers. MVNOs have already demonstrated how effective an industry-dependant strategy can be.
For example, once eSIM is the industry standard, MNOs can strike deals with chipset companies, guaranteeing that specific networks are the recommended or even exclusive connectivity option on the hardware the manufacturer produces.
Alternatively, they could cut a similar deal a few steps further along the supply line, by working directly with the OEMs. An OEM – an original equipment manufacturer – could be incentivised to pair their devices specifically with certain operators, making every device they produce a win for the MNO before it even hits the stores. With the old removable SIM cards, this just wouldn't have been an option.
Not to mention, because their models are built around customer service, operators are well primed to own more of the customer experience—more so than other providers in the value chain. So, while the natural succession of the customer relationship is often predicted to fall in the laps of OEMs, it's worth noting that many of them – with a few notable exceptions – have little idea about how to engage with their customers post-sale, much less the business ecosystem in place to provide an as-a-service model for their devices.
Operators, on the other hand, have a huge opportunity to create new products which demonstrate their commitment to hassle-free device management and customer service beyond what most other companies could offer.
There are also major rewards waiting to be reaped from the advancement of IoT technology. Embedded SIMs are the missing piece in the Internet of Things and, as they become increasingly widespread, so too will IoT-enabled devices. More IoT means an unprecedented need for constant network connectivity.
To really optimise the strengths of IoT, smart devices need to be able to communicate continuously, without losing signal when they leave WiFi zones and hotspots. With an eSIM in anything from your shoes to your wallet, network operators will have an even more essential role to play. It won't just be about keeping phones on the grid: careers, exercise, recreation – entire lifestyles will soon need constant connectivity, and the embedded SIM allows MNOs to offer that in ways they never could before.
We're not dealing in hypotheticals, either—the eSIM is already a reality. An estimated 150 million devices will be connected by eSIM in 2018, and that number will only increase as the Internet of Things becomes an ever more ubiquitous fixture of our daily lives.
For MNOs and MVNOs, there is plenty of good news: innovative new deals to be struck, unprecedented IoT opportunities, and the chance to cement their place in consumers' lives for many decades to come.
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