eSIM: What is it for?

The next step in SIM cards evolution is not about squeezing them into even more minuscule form factors, it’s about replacing them all — with a profile stored in connected device.

Recently Samsung introduced the Gear S2 Classic 3G smart watch, which is the first device with eSIM support. Although it is a pilot, this technology is bound to spark a serious discussion before long. eSim is expected to be implemented in the upcoming iPhone 7, and mind you, Apple has always been at the forefront of the industry in terms of adoption and commoditization of new technologies and standards in mobile tech.

As you may remember, it was the Cupertino giant that urged all, from the biggest telecom corporations to no-name Chinese vendors, to migrate first to the microSIM and then to the nanoSIM standard. Does a new stage of miniaturization await?

No, this is not about squeezing SIM cards into ever-more-minuscule form factors (in their desire to make SIM cards as small as possible, some went as far as carving out a chip from a nanoSIM card and sticking it to an SD card for use in combined slots). eSIM — or embedded SIM — presupposes no external chip at all. Instead, all subscriber data is stored on the device itself, initially downloaded remotely.

Those who actively monitor the news agenda on the mobile front would say: “Wait a minute, aren’t there virtual SIM cards around? There are Apple SIM, Project Fi, and the VSCA Alliance. Aren’t they the same?” No, eSIM is a step — or even a leap — forward. In previous solutions, a SIM card profile was downloaded remotely, but on the device level, the profile was stored on a SIM “dummy” that could be reused in a different handset. In case of eSIM, there are no replaceable “dummies” at all, and the chip itself is embedded into the handset.

The new SIM technology does not necessitate changing the GSM standard. It functions the same way, except that one needn’t replace SIM cards — one just switches between different profiles.

What’s the point?

Well, the use of eSIM allows for a sleeker handset design: no need for physical SIM card slots.

That’s good news for device producers: It will be easier to create dustproof and waterproof designs, as well as to make devices thinner. Even better, eSIM adoption would pave the way for many wearable vendors that design smart watches or fitness trackers. Such devices could get their long-craved autonomy from handsets or Wi-Fi networks and become permanently connected.

In addition, handset vendors will get a head start in their interaction with mobile carriers, which traditionally exercise control of the device market. Nowadays vendors have to negotiate their cause with carriers to deliver their products to the shelves, but they would be able to leverage eSIM and establish direct connections to the retail market.

Vendors would be able to sell their products through their branded online stores, offering users a choice of subscription (with eSIM, vendors can remotely switch on and off any operator) or, even better, a default operator subscription. This is why some of major carriers strongly oppose the rollout of eSIM: They are used to playing the leading role in the carrier–subscriber interaction and will let it go easily.

Security is also vital here. A regular SIM card is easily disposed of when a person’s handset is stolen or lost. In this case an outsider, having disabled all restrictions (if it’s not an iPhone), can use the newly obtained device with a different SIM card or resell it.

But this trick would not work on eSIM. The legitimate owner’s password is needed to download a new profile; moreover, on each reboot, the handset downloads the previous profile, making it possible to locate the stranded device.

eSIM has already been standardized by the GSM Alliance, and a number of major carriers voiced their support for the new technology, including AT&T, Deutsche Telekom, Etisalat, Hutchison Whampoa, Orange, Telefónica, and Vodafone.

However, with all due respect to eSIM’s benefits, the migration won’t happen overnight. Smart Insights forecasts the sales of eSIM-enabled handsets would total 346 million to 864 million units by 2020. Obviously, it’s a very conservative forecast, and industry support does not equal adoption. Regular SIM cards are alive and kicking, with sales expected to drop just 16% by the end of the decade.