06 October 2023

eSIM technology is revolutionising consumer and enterprise markets across the globe, with Asia pegged as the leading world market in a few short years…

eSIMs hold a wealth of promise across a variety of applications, offering flexibility, convenience, connectivity, and the ability to leverage emerging technologies. Instead of an integrated circuit on a removable SIM card, eSIMs comprise software installed onto an eUICC chip which is permanently installed on the device. Once active, the eSIM can be reprogrammed remotely with new information, enabling rapid, hands-free carrier switching.

The first standard for eSIMs was released by the GSMA in 2016. Since then, eSIMs have been taking the wireless connectivity market by storm. Early adopters of eSIM technology – the USA, the UK, Europe – have typically been developed world regions. However, huge untapped markets exist in emerging economies in Asia and Africa. In fact, Asia is expected to be the largest market for eSIM technology in the years to come.

Data Bridge Market Research estimates that Asia Pacific’s eSIM market is likely to experience a compound annual growth rate (CAGR) of 13.8% over 2023-2027, driven by increased awareness of the advantages of the technology. Significant market drivers include the rapid adoption of IoT devices for both consumer and enterprise applications; increasing demand for connected cars; the expansion of 5G; and the growing need for innovative consumer electronics.

Local opportunities

Asia’s MNOs are rapidly adapting to the new opportunities presented by eSIM technology, although the business case varies from one MNO to another, depending on customer base, market position and business objectives.

The market opportunity for eSIMs can broadly be split into two categories: consumer and IoT.

The consumer market includes traditional mobile services - for which eSIMs are particularly useful in Asia’s smaller nations, where consumers can switch carriers as they cross borders without swapping out physical SIM cards – as well as connected wearables, in addition to new market revenue streams like value added services (VAS). For now, the consumer market dominates, although uptake remains lower than in western countries where more people own more devices. This is expected to change, however, with Asia’s emerging middle class, strong GDP growth, and increasing access to high-speed connectivity, rendering connected devices a more attractive and affordable proposition.

Sachin Arora, head of connectivity and IoT at Giesecke+Devrient India, agrees: “at the moment, the eSIM market is still dominated by the consumer sector (mobile phones, smart watches, etc.). However, within the next 3-5 years, there will be more IoT devices which will require eSIM. Currently the penetration is not deep and will take some time.”

Indeed, the adoption of eSIMs for IoT/M2M applications is expected to be significant due to the specific requirements and scalability of deployments in sectors like agriculture, energy, transportation, and healthcare. eSIMs are particularly well-suited for IoT/M2M applications due to their ability to enable seamless connectivity and remote management of devices, ideal for delivering large-scale IoT deployments while achieving significant savings compared with managing physical SIM cards. Going forwards, IoT/M2M is expected to overtake the consumer market as smart homes, cities, vehicles, utilities, etc. continue to expand, and increasing digitisation grows the total number of non-consumer connected devices.

“Currently, we see the future of eSIM with automotive (telematics), consumer business (mobile phones and smart watches), and fixed wireless access (FWA) use cases,” adds Arora.

Standing out from the crowd

Both segments – consumer and IoT - allow Asia’s MNOs to leverage emerging markets and industries to expand their customer base and grow revenues, while adopting eSIMs can help MNOs stand out from the crowd in competitive markets. By offering more flexible options to consumers like seamless switching and innovative services, operators can attract customers that value flexibility and convenience.

Additionally, eSIMs enable the sale of connectivity services more efficiently without having to worry about customer relations or support.

“The digital transformation of customer engagement has become a priority for most operators looking to improve operational efficiency and customer experience,” says Eulalia Marin, principal analyst at Analysys Mason. “eSIMs enable the provision of a full digital service experience where the customer acquisition and onboarding processes are managed using digital channels.”

“The digital transformation of customer engagement has become a priority for most operators looking to improve operational efficiency and customer experience.”

Indeed, remote SIM provisioning and management simplifies device onboarding and reduces support costs while enhancing overall operational efficiency. By bypassing traditional physical SIM card distribution and remotely activating eSIMs, significant cost savings can be achieved, particularly in remote or rural areas.
Ultimately, eSIMs may well replace traditional SIMs in most applications – and those MNOs that do not adapt will be left behind.

Encouraging adoption

eSIM uptake for consumer devices like smartphones, wearables, and tablets across Asia is strong, but not as rampant as in Africa, where heavy investment by governments and vendors are encouraging rapid uptake. Further, several reports cite a lack of awareness as slowing down the eSIM opportunity, particularly in emerging markets.

“eSIMs are now available in more than 190 countries worldwide but awareness and adoption remain low, partly due to operators’ reluctance to promote the digital solution over fears of increased churn and revenue loss,” says Marin.

However, this churn can also be viewed as an opportunity, explains Marin: “eSIMs’ potential to reduce customer adoption barriers and increase churn can also be advantageous to operators as it can help them to attract new customers more efficiently. Operators can use eSIM technology to attract customers to their own networks. By offering a test-drive, operators can convince users on competing networks to subscribe to their services.”

Asia is a big place with many distinctly different countries with variations in economic and technological maturity. Accordingly, different countries are addressing the eSIM opportunity, and management of eSIM platforms, differently.

“Most MNOs in southeast Asia and India are equipping themselves with eSIM management platforms,” concurs Arora. “In India, MNOs look for their onsite system, although in southeast Asia, managed service systems are more prominent. The reason for this is to be prepared for the technology shift (physical to digital SIM) and the growth market of IoT devices which require connectivity.”

Ultimately, eSIM uptake depends heavily upon regulatory support, infrastructure development, and partnerships and ecosystem development. With the drive we’re seeing to connect all of Asia, eSIMs will necessarily play a significant role in connecting the unconnected, bridging the digital divide, and digitally transforming the entire continent