August 16, 2018
eSIM is driving a change towards a new IoT ecosystem, introducing new ways in how people are buying and choosing the devices and solutions for their homes, offices, factories and entire cities. This opens up a once-in-a-generation opportunity for the mobile operator sector to open new revenue streams.
Nothing stands still in cellular space. The wireless world is changing and quickly. Transformation in the global mobile market towards smart era of networked and connected appliances, cars, factories, homes and cities has begun, and it is moving forward with speed, with smart IoT as one of the biggest factors driving this change. This next phase of the internet evolution is now inviting electrical devices of any type to join and connect. The new market ecosystem is introducing new ways in which us as consumers buy and choose the devices and solutions to our homes, offices, factories and entire cities. This opens up a once-in-a-generation opportunity for the mobile operator sector. Connected IoT devices represent a brave new world with new and niche demands - especially for MVNOs and other IoT connectivity providers. Discussion amongst delegates at the 2017 MVNOs World Congress make it clear that IoT/M2M technology is by far considered the biggest new trend impacting the sector.
One key factor enabling growth of connected devices in IoT has been the evolution in the SIM chip technology. Removable SIMs have been quite well suited to the consumer mobile market, but for device manufacturers traditional removable SIMs add cost and complexity. The new technology trends were first making the SIMs increasingly smaller smarter simultaneously. The aim was to make SIMs invisible, hidden inside the devices with intelligence for remote monitoring and controlling over-the-air. Whether meant for a sealed telematics unit for a car, sensors for plant machinery or home appliances, the fact is that a permanent embedded SIM is much easier and cheaper to produce and manage. eSIM brings flexibility for connectivity by allowing freedom and ease of seamlessly accessing different networks globally. The recent eSIM research by UROS reveals that as eSIM provides easy local equipment connectivity, it will eventually remove the need for international roaming in the consumer roaming scenario and the situation is likely not to differ much with industrial IoT technology.
Technological advancements have come a long way, with eSIM technology already widely used in IoT devices. It is being said that eSIM is the key enabling technology behind many IoT solutions, driving the success in the market. No wonder, as this technology brings with it opportunities for new products to enter completely new market segments with its easy equipment connectivity for both static and mobile devices creating more and more crossover between B2B and B2C markets. IMS has calculated that there should be 150 million devices connected by eSIM by now, mid-2018 and that the amount will be increasing with enormous speed, reaching one billion by 2020.
While the SIM chipsets have become invisible in size, they have also become more affordable in price. According to Moore’s law, the world’s computing power roughly doubles every eighteen months. Interestingly enough, the reverse Moore’s law states that the price per existing computing power is halved every eighteen months, essentially meaning that IoT chipset are plummeting in price, becoming more and more affordable. With this trend it is being forecast, that eventually these chips will be integrated by default to every electronic device manufactured. This will be for different reasons ranging from monitoring and managing devices for optimizing processes to collecting data and analyzing consumer behaviour. This ‘smart’ era is introducing networked appliances, cars, factories, cities and homes - eventually digitizing toasters and other devices, which actually have no internet features whatsoever. These will no longer only include high-end categories, but will be available as such to the average consumer, as a tailored turn-key solution will be a natural part of any initiated smart project. Almost everything will become a computer and connect through technologies invisible to consumers, such as 5G, LTE-M and Zigbee.
Device manufacturers already experience the benefits of eSIM throughout the evolution of IoT design. With increasingly small chip technology, eSIM equipped devices are becoming more compact with better resistance for water and impact, thus leaving more room for better batteries. In industrial IoT, connected devices and sensors are becoming wireless and mobile. The sensors can be placed into more challenging locations when no wire connectivity is required for connecting the devices for managing and monitoring. All is done over the air - seamlessly, wirelessly and energy efficiently. One crucial element of wireless devices is their battery performance through new energy efficient network technologies.
Apart from the device production perspective, one key considerable experienced benefit comes from the freedom of choice and lower cost when it comes managing the eSIM connectivity, meaning switching to a different operator. The second version of the global GSMA specification enables any consumer device to store more than one operator profile simultaneously, with only one in use at any time. In practice, device manufacturers and operators are now able to offer consumers and manufacturers the ability to select the operator of their choice, and to then securely download that operator’s SIM profile to any of their devices that is connected with eSIM technology.
Device manufacturers will no longer need to worry about being locked to just one carrier or needing to manually change SIMs. They are able to ship devices to any part of the world, while being confident they can connect to local networks without the hassle of seeking individual partnerships with operators. This will not only ensure fulfilling customers’ demands, but also to follow any possible local regulations for device connectivity. This also opens up the possibility to optimize cost structure, while the data provider can be freely selected and switched over-the-air when reconsider deals is required. This scenario serves static devices, but even more importantly mobile devices. Automated SIM profile switching technology automates the network selection, making sure the device can switch to another network when moving across country borders.
All this is changing the way we choose and buy devices and solutions to our homes, offices, factories and entire cities creating a once-in-a-generation opportunity for the mobile operator sector introducing an entire new complex of many different ecosystems. Connected IoT devices represent a whole new world with new and niche demands for MVNOs and other IoT connectivity providers. The first hurdle is to understand each player’s role in this very different kind of broad market.
Manufacturers, cities and municipalities on a global scale are awake and looking for the newest applications and expertise in various areas to optimize process management and improve services. The smart IoT concept at its best utilizes information and communication technology to optimize the efficiency of operations and services for entire nations to improve the quality of government services and citizen welfare. Wirelessly connected electronic IoT data collection sensors and platforms are here to supply information, which can be used to manage assets and resources efficiently in real time. Smart City projects present a whole new challenge in IoT, introducing a demand for managing integrated connectivity across many different devices. There are differences between the network, security requirements of traffic sensors, service and IP CCTV and consumer-facing applications, which feed data to citizens’ smartphones. It is possible to work with individual MVNOs, providing niche services for each activity. An alternative is to work with IoT solution providers managing the whole scope. Global GSMA specifications align ecosystem participants when introducing eSIM technology. According to estimates of Gartner by 2020 the number of connected devices will reach 20.4bn worth up to £6 trillion in investments. By 2025 we might already be looking at 82bn connected devices.
Smaller, more agile organizations that provide global connectivity solutions have the possibility to become valuable partners to traditional operators in the IoT arena. As innovative specialists within the mobile market, they make sure end-users get the seamless connectivity they demand. This can be done through partnering with device OEMs, acting as intermediaries, which manage relationships with large carriers. The road to success lies in the ability to make oneself valuable and indispensable to the partner.
eSIM is opening entirely new revenue streams to mobile operators, as they can become and act as new service providers with all the add-on services that can be provided on top of connectivity. Data, monitoring, security, billing, integration with broader business and communication services - can be packaged and sold as apps. The key challenge is to find the correct partner who knows the place and how to operate in the complex of ecosystems that IoT represents.
So what can we learn from all this? The world is full of possibilities for everyone adopting the technology advancements and enjoying the benefits, but the playing ground is still bumpy. Forming strategic alliances with carefully selected IoT solution providers is one way to fill in the blanks for those who may feel like they are stumbling in the darkness.
UROS is a leading innovator operating in the IoT ecosystem, providing both turn key smart IoT solutions for cities and industries as well as partnering with OEMs for smarter consumer mobile device connectivity. While connectivity is at the core of what we do, we think beyond connectivity and are passionate to build IoT solutions and services that bring additional value. What you wrap around IoT is what brings the value, not the IoT itself.
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