Security is the Key Component to Fully Unlock the eSIM Opportunity

Thanks to its reprogrammable capabilities, the Embedded Subscriber Identity Module (eSIM) is transformative in nature. It will enable traditional hardware players to shift toward a platform and services play, provide new life and intelligence to previously unconnected devices, and open up new end markets via adjacencies, while placing connectivity owners as Internet of Things (IoT) gatekeepers, opening up a business model platform to help improve brand stickiness and loyalty.

It might be an obvious statement, but the eSIM and cellular connectivity go hand in hand. However, the eSIM and its reprogrammable capabilities make it more than another secure connectivity enabler and an area that needs careful consideration and perhaps one that is somewhat overlooked, with many vendors still super concerned with the potential impacts on traditional markets, including the traditional removable Subscriber Identity Module (SIM), rather than fully focusing on the wider opportunity on the horizon.

Today it feels like all new devices are now “smart” and connected, but the connection itself is of little value, unless it is tied to a tangible business model, is connected to automated processes, driven by an ability to collect new data that can drive business decisions or presents the ability to expand personalized services and consumption towards newly connected things.

eSIM inclusion into devices that have largely remained unconnected to date means that they become more standalone in their own right and more intelligent, enabling an extension of connectivity reach and choice of form factor for consumers to digest additional data and services.

Creation of new feature rich connected devices will come with demand to move experiences and services traditionally consumed on mobile towards other device types, ranging from wearables, automobiles, TVs, and smart home devices to name but a few. In turn this will create a new service ecosystem where personalization and preferences can be shared and consumed across multiple different device types, anywhere and at any time. This will also create an ecosystem that requires careful cross device management, spanning not only multiple device types, but also end markets.

Shaping a future strategy around service enablement which evolves around newly connected devices could mean that MNOs have access to new service related revenue opportunities through big data analytics and other cross-device services, for example, identity as a service.

For MNOs this is an opportunity that should not be dismissed. ABI Research believes that the eSIM is the acceleration platform which will place MNOs at the center of the IoT, as the IoT gatekeepers, opening not only new subscription opportunity, but the ability to collect new data points and launch new innovative and unique experience-based services. The latter is where focus needs placing in order to draw the true value out of the eSIM opportunity. Simply focusing on connectivity supply will not be enough and MNOs will need to tailor solutions and services in order to create and manage a family of devices and services.

Security and creation of a root of trust at the device level will prove an intrinsic requirement in order to realize any service extension and diversification opportunity, via access and convergence into new end markets and multi-application enablement.

Market convergence and multi-application enablement is not a new concept, but one which is being driven by feature rich device types including mobile and wearables within the consumer domain. Vendors including Gemalto, IDEMIA and G&D with TSM platforms are already targeting this market, having already established themselves within the management of popular mobile payment platforms including Apple and Samsung Pay via lifecycle management and tokenization and moreover within the eSIM market, already active in the field of subscription management for devices including the LTE enabled Apple watch series 3 and cellular enabled range of Samsung smart watches.   As the eSIM begins to filter into other device types, this list of intelligent devices will expand as will the ability to convergence with other end markets, driving a need for further multi-application enablement. Vendors which already have well established relations across MNOs, OEMs, banks, financial institutions, transportation authorities and enterprises, with expertise across multiple end-markets including payments, automotive, identity and access control are extremely well positioned to take advantage of the required security management component of the eSIM, and subsequent drive towards market convergence and multiapplication enablement.

Connectivity is a core requirement in the delivery of multi-application enablement, whether to manage the lifecycle of multiple applications/devices or provide the required security requirements via tokenization or secure authentication.

What is certain is that security is a central piece of the multi-application enablement puzzle, used as a central trust anchor from which to extend and offer additional services and functions at the device level.

Not only is the eSIM a connectivity enabler, but it is also a secure hardware-based IC which can be leveraged to ensure and establish the trust anchor from which OEMs, MNOs and other service providers can extend service reach and capabilities via multi-application enablement.

eSIM Connectivity is just one market aspect, but what that connectivity can enable in terms of diversification opportunities from a services and end market perspective is where the real value of eSIM connectivity enablement lies and this cannot be successful without security sitting at the center of IoT and eSIM connectivity strategies.