One of the most frequently asked questions I get is what will the impact be of Apple’s decision to launch an e-SIM-only iPhone?
But the short answer is that it’ll be significant and far-reaching. Let’s start by covering some background.
An e-SIM, or embedded SIM, is a small chip inside a cellular device that replaces the need for a physical SIM card and tray. The concept’s been around for over a decade, but has mostly been used on tablets and wearables. Momentum in smartphones has been slow, dragged by resistance to the technology among mobile operators.
Operators’ reluctance is understandable. Any move that makes it more straightforward to switch provider could lead to downward pressure on prices. E-SIM also limits providers’ opportunities to engage with customers and upsell new products and services, as network provisioning is mostly done remotely. This threatens prized customer relationships.
But that previous unwillingness is all about to change, as in September 2022, Apple announced an e-SIM-only variant of the iPhone 14 for the US.
Apple has offered e-SIM support in iPhones since the launch of the XR, XS and XS Max models in 2018, but this was always alongside a physical SIM card slot. The company’s influence on the industry and its sheer volume of sales makes an e-SIM-only iPhone especially significant.
In my view, the most drastic scenario would be if e-SIM encourages manufacturers to become mobile virtual network operators themselves. Customers would then be able to buy a device and service plan from the same company, leaving traditional operators cut off from direct interaction with users.
In the US, any carrier now wishing to connect subscribers to the latest iPhones must enable e-SIM support. As Apple is the leader in this market, it’ll affect tens of millions of potential customers.
Such is the strength of the iPhone, it feels inconceivable that any carrier can be successful without working alongside Apple. Providers not ready, prepared or able to support e-SIM will be heavily disadvantaged.
Although operators may be wary of e-SIM, they shouldn’t be dismissive. Smaller brands and mobile virtual network operators should take it as an opportunity to lure customers from larger rivals. As they have a greater share of the market to gain, anything to aid switching works in their favour.
E-SIM also reduces the need to manufacture, package and distribute millions of SIM cards annually, helping cut costs and lessening the industry’s environmental impact. It can also help prevent fraud: as the SIM card is embedded in the hardware, it’s no longer possible to separate a subscriber’s identity from their device.
If Apple’s implementation of an e-SIM-only iPhone is successful in the US, I believe it will quickly replicate the approach elsewhere. The UK could be one of the first in line, given that it also has a high market share of iPhones.
Apple has been the trailblazer for e-SIM, but other phone-makers — including Samsung — look set to accelerate their own strategies. This will be crucial for long-term adoption of the tech.
For smartphone-makers, the main benefits of offering e-SIM-only capability come from not needing a SIM card slot. This frees up valuable space on the device, allowing for a sleeker design or more room for new connectivity-improving antennas, and protects against water and dirt damage, leading to a lower failure rate and higher customer satisfaction.
But the biggest impact from e-SIM will be on customers. I expect it to trigger permanent changes in the way people buy mobile phones, manage contracts and engage with network operators. For example, it’ll prompt phone users to review their tariff or choice of provider more regularly, or subscribe to more than one plan on a single device. People will also start to manage different profiles on their smartphone, such as separate personal and work accounts.
I do fear that less tech-savvy customers could miss out on some of the benefits if they’re unable to grasp how e-SIM works. That would inevitably threaten to widen the digital divide. And a lot of people still prefer to speak face to face with their provider; if e-SIM sees strong adoption, there’s a worry operators could cut back on customer support.
For years, implementation of e-SIM in mobile phones seemed to move at a glacial pace. But now, everyone’s talking about how the latest iPhone will reshape the industry. Big changes for operators, phone-makers and customers lie ahead.
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