The global eSIM market was valued at over US$7,190 million in 2021 and is estimated to grow at a compound annual growth rate (CAGR) of 7.8% between 2022 and 2029. The rapid increase in the number of Internet of Things (IoT) connected devices in consumer electronics and the application of Machine-to-machine (M2M) communications is expected to create new opportunities and influence the market growth during the forecast period.
Embedded Subscriber Identity Module (eSIM) is a digital hardware chipset that allows consumers to store multiple operator profiles on a single device and switch between them remotely by reprogramming the software settings.
AgileIntel’s global eSIM market study is a 157 pages report containing in-depth analysis on historical and forecasted spending patterns in the sector. The study offers granular value data from a global, regional, data type, industry, and end-user perspective.
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The base year is 2021 for the study with historical data between 2018 and 2021. The data forecast has been provided for the years between 2022 and 2029.
Key insights from the Global eSIM report
Insights on Solution:
The eSIM market is segmented into connectivity services and hardware, based on solution type.
The connectivity services segment held the largest revenue share of the eSIM market, accounting for around 89% in 2021, and is estimated to grow significantly during the forecast period. This high growth can be attributed to the rise in adoption of eSIM for M2M connections which is expected to create revenue generation opportunities for the network operators by providing subscription services.
Meanwhile, the hardware segment is projected to grow substantially, registering a CAGR of over 31% during the forecast period. The increase in consumer electronics manufacturers is anticipated to fuel the demand and contribute to the segment growth.
Market dynamics
Trends
The emerging 5G technology is expected to provide high internet speed and expanded network capacity, which is expected to positively impact the eSIM market, increasing its adoption across several cellular-enabled devices. The need for remote connectivity is rising rapidly to manage these network-connected devices such as smartphones, wearables, smart glasses, connected cars, which is offered by integrating eSIM with consumer electronic products. The advent of 5G is expected to enable faster data communication with lower latency, providing better navigation and more connected devices in smart homes. eSIM usage is likely to be one of the prominent factors supporting consumer 5G use cases, as it can be easily integrated into smaller devices such as fitness bands, wearables, and smartwatches. For enterprises using IoT systems with cellular-enabled devices, the deployment of eSIM presents them with an opportunity to upgrade their systems to accommodate 5G and reap its benefits.
Drivers
The growing emphasis on remote access for M2M communication systems is expected to drive market growth during the forecast period. M2M systems comprise of wi-fi communication links, Radio Frequency Identification (RFID), sensors, and automatic computing software, which interprets data and transmits it through a network for further processing. Factors such as reduced maintenance costs and downtime, real-time data monitoring, low power consumption, and remote provisioning have resulted in the increased adoption of M2M systems in applications such as connected cars, smart meters, smartphones, smartwatches, and retail POS, among others. These applications require improved network connectivity, wherein eSIM is integrated with M2M systems, thereby driving the demand for eSIMs.
Opportunities
The rapid adoption of IoT across various products and applications such as home appliances, health monitoring systems, agriculture, utilities, self-driving drones and connected vehicles, and industrial machinery will likely provide growth opportunities for eSIM vendors. The implementation of eSIM technology is more economical than a traditional SIM. It also occupies lesser space, making it easy for the eSIM to be integrated into the hardware. The eSIM technology can be deployed with IoT-enabled systems for large-scale machine-to-machine operations across sectors such as oil & gas, manufacturing plants, power plants, and warehousing facilities. Businesses relying on IoT systems are expected to achieve substantial cost savings with the eSIM technology while also offering the benefit of staying connected with the systems remotely through mobile networks.
Challenges
The eSIM enabled systems allow automatic interoperability between multiple SIM operators and connectivity platforms, allowing remote provisioning of SIM profiles. With several network service providers involved in the operational chain, preserving the security of these systems has become complex. The credentials Of Mobile Network Operators (MNOs) are collected and stored by the eSIM in an inbuilt device software and are prone to security hacks. Besides, eSIM operation across multiple physical platforms and MNOs exposes it to several risks of the virtual environment. As such, the operational flexibility offered by eSIM may prove futile if the security is compromised, thus hampering the market growth.
Impact of COVID-19
The eSIM supply chain has been adversely affected because of the COVID-19 pandemic. COVID-19 had a devastating influence on the devices market worldwide, leading to significant disruptions in the supply chains, production lines, inactive logistics, and labor shortages, delaying shipments and slowing down the development of next-generation products which use eSIMs.
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Over the past few years, eSIM has benefited from increased market demand and active support from different industry stakeholders. During the COVID-19 pandemic, its genuine benefits have been realized, particularly as part of mobile operators’ strategies to digitalize their services. Moreover, consumers were open to starting mobile services using eSIMs, rather than going to a store to activate the physical SIM card. Due to the pandemic, many operators may have decided to delay their eSIM implementation plans on many of their mobile phone models to focus on critical priorities, such as mobile network resiliency.
However, the number of eSIM devices commercially available for purchase across smartwatches, smartphones, tablets, and laptops increased in 2021. As the share of eSIM-enabled consumer device shipments continues to grow, eSIM activations are expected to rise sharply, providing avenues for the eSIM market growth in the coming years.
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