Apple Event Analysis: iPhone 14 and iPhone 14 Pro Max to Harness eSIM Technology in US

September 2022

Telecoms & Connectivity

Scarlett Woodford

Principal Analyst

Apple has announced that US models of the iPhone 14 and iPhone 14 Pro will use eSIM (embedded SIM) technology, replacing traditional SIM cards in these devices. eSIMs are hardware components that are directly soldered into a compatible device or sensor, instead of a traditional SIM card. eUICC (Embedded Universal Integrated Circuit Card) software enables eSIM modules to remotely switch between operator profiles; allowing increased flexibility and enhanced network coverage.

Juniper Research forecasts that the total number of eSIM modules installed in smartphones will reach 2.9 billion by 2025, with adoption of eSIM frameworks from device manufacturers such as Apple being key to accelerating the growth of eSIMs in consumer devices.

  
What Does this Announcement Mean for Consumers?

eSIM-enabled smartphones will allow consumers to install local profiles when moving outside of their home network; eliminating roaming charges. Using eSIM data plans, subscribers are only required to buy a data plan that covers the country they are travelling to. That is, eSIM technology enables travellers to adopt roaming plans without upfront subscriptions or commitments; using a pay-as-you-go model. Roamers can store multiple eSIMs on a single handset, but only one eSIM can be used at any one time. This makes it easier for travellers passing through different countries to adopt the appropriate data plan. Therefore, Juniper Research anticipates that demand for eSIM-compatible smartphones will increase in tandem with roaming activity, with subscribers favouring simple solutions for international travel.

Juniper Research believes that the combination of 5G connectivity and eSIM compatible smartphones will transform customer experiences, offering faster browsing, download speeds and enhanced connectivity. Moreover, eSIMs allow for reprovisioning, which will make it easier for consumers to switch between network profiles; accessing 5G connectivity where it is available. With Apple offering support for 5G on iPhones in over 70 markets around the world, including support for SA (standalone) networks, Juniper Research anticipates that the company is primed to capitalise on the growth of 5G roaming.

What Does This Mean for Network Operators?

The aforementioned reduction in roaming charges will have a significant impact on operators, who work within tight profit margins. In response, service providers will look to recover this cost by reducing the price of smartphone contracts. Through competitive pricing, operators will look to expand their market share by making smartphone ownership more accessible to subscribers. A failure to provide affordable contracts will lead to customer attrition, with eSIM technology making it easier for consumers to switch between network profiles.

What Does This Mean for Apple and Other Smartphone OEMs?

For smartphone manufacturers like Apple, eSIMs enable the production of smaller devices, as there is no longer a need to accommodate a SIM card and the accompanying SIM card tray. This will reduce the cost of smartphone production which, when translated to handset pricing, will make eSIM-compatible smartphones more accessible than smartphones with traditional SIM cards.

Juniper Research anticipates that Apple’s production of eSIM-enabled iPhones will ultimately increase its revenue from devices, as reducing the price of smartphones will make them more accessible to consumers. That is, mobile subscribers that were previously unable to afford an iPhone will emerge as a new addressable consumer base. It is important to note that the value of eSIM technology is dependent on the number of vendors that adopt it. That is, if vendor adoption accelerates, the value of eSIMs will become greater. Once this occurs, additional pressure will be placed on operators to support the standard in order to avoid customer attrition.

• The consumer sector will account for 94% of global eSIM installations by 2025. Established adoption of eSIM frameworks from consumer device vendors, such as Apple and Google, will accelerate the growth of eSIMs in consumer devices ahead of the industrial and public sectors.
• Global eSIM deployments across all consumer verticals will increase by 170% over the next four years, with widespread adoption reliant on backing from network operators. Juniper Research urges manufacturers to place pressure on operators to support eSIM frameworks and accelerate market maturation. 
• However, fragmentation of hardware vendors in the cellular IoT device market will necessitate each vertical to adopt a combination of wireless technologies, hardware, and management tools. In turn, specialist vendors will emerge that provide robust eSIM form factors for industrial environments.
• Three key areas of focus for eSIM adoption in the industrial sector will arise: oil and gas, manufacturing and logistics. The development of rugged form factors will position vendors well to capitalise on the market, as eSIM installations in these verticals grows from 28 million units in 2021, to 116 million by 2025. 
• Ultimately, ensuring convenience for the end user must remain the top priority for eSIM management platform providers. To do so, platform providers must provide a level of service comparable to that found with traditional SIM deployments.