SGP.32 Market Success to Be Defined by Business and Pricing Model Flexibility

With SGP.32 solutions expected to begin scaling through 2026, the commercial changes imposed by this new technical standard will begin to ripple through the market.  The transition of Internet of Things (IoT) Embedded Subscriber Identity Module (eSIM) infrastructure from SGP.02 to the SGP.32 standard will mark a turning point in prevailing business models, with pricing and commercial relationships set to change. The decoupling of components resulting from standardization naturally drives out a more competitive environment, and while early phases of adoption will emphasize end-to-end solutions, mature players are already looking to understand priorities around component ownership and effective long-term Total Cost of Ownership (TCO).

Traditionally, the Remote SIM Provisioning (RSP) market operates on per-transaction billing, and moves toward the increased flexibility in order volumes of “as-a-Service” and cloud-based solutions have only gained significant traction in the past 2 years. The heavy dominance of the consumer market, which constituted 76% of RSP downloads in 2024, has had a hand in the commercial model of infrastructure providers, given a more homogenous addressable market than the IoT space. Growth in IoT RSP will drive significant and rapid fragmentation of business models in comparison, with a need to offer more flexibility to accommodate the broad and growing spectrum of IoT customers.

The huge variety of needs already seen in IoT customers will only increase with greenfield market growth, the complexity of customers undergoing hybridization and a transition between standards, and the differing commercial models of new use case applications. RSP providers will need to accommodate variations in customer cashflows and order cadences, differing technical needs in the form of data usage, frequency of profile transactions, and batch sizes and manufacturing flows—resulting in a complex commercial environment that is not adequately met by existing pricing models.

• Align Recurring Revenue Models with Customer Needs: IoT customers are already wary of the recurring revenue model that is expected to dominate the SGP.32 market, with some even seeking to avoid SGP.32 adoption as a result. Demonstrating the “value add” of the recurring model with excellent ongoing connectivity and device management platform features will be essential to justify perceived or actual increases in TCO, with orchestration becoming an increasingly pressing driver as SGP.32 fleets scale.
• Offer Flexibility to Capture the Full Spread of SGP.32 Growth: Continuing the market trend toward scalable, somewhat uncommitted as-a-Service models, which can accommodate low volumes if necessary, will be essential to enable new applications and market entrants to take root—particularly in highly fluctuating project-based end markets, where end-device uptake is unsteady.
• Accommodate Different Ownership Models: Pricing models must have by-component routes, as well as clear paths forward for customers who may seek to transition to owning key components as they mature. The technical interoperability introduced by SGP.32 can only be fully utilized if the commercial models reflect this new era of “pick and choose” componentry, accommodating the varying needs of customers concerned with IoT Profile Assistant (IPA) in the eUICC (IPAe) versus IPA in the Device (IPAd), ownership of the eSIM IoT Manager (eIM), and ownership or self-development of orchestration.
• Manage Switches with Highly Clarified Liability and Control: Ability to switch providers is an often-remarked upon benefit of SGP.32 adoption, though switches are likely to remain technically and pragmatically challenging. The management of risk during a switch is likely to be a costly issue for customers, and the responsibilities and fail-back capabilities provided, as well as the details of how and on what triggers liability is assumed by the new provider, will need to be explicitly and comprehensively covered under contracts and Service-Level Agreements (SLAs). Continuity of service, and ease of resolving problems during a switch, is an essential issue in building trust among IoT customers. Some have been oversold on the pragmatic ease of switching device fleets, particularly at scale, and the issue will need to be carefully addressed to prevent customer dissatisfaction and perceptions of “lock-in” akin to proprietary solutions, which the SGP.32 standard is designed to solve.