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Friday, September 09, 2016

An eSIM & IoT thought experiment

Imagine a cellular-connected interactive teddy-bear.

It has a button for a child to speak to their parents, perhaps a video-camera inside an eye, and maybe some basic sensors for movement, temperature or GPS. Conceivably, it could connect via social-networks to other toys. Ideally it needs to be mobile, as it'll be used in the car, or at kindergarten, or on holiday - not just at home.

The cellular radio is embedded deep inside the bear, along with a SIM card. The toy has to be soft - and there can't be any small removable parts like a SIM tray and conventional card, as they could be a choking-hazard.

So it makes sense to use an embedded, soldered in SIM - which also gets around the problems of fluff and fibres blocking a normal SIM-tray. And because the bears are shipped around the world from a single factory, the concept of eSIM and remote-provisioning seems to make a lot of sense as well.

Seems like an ideal eSIM use-case, doesn't it? A classic example of consumer mobile-enabled IoT?

(There are already various smart/connected WiFi or Bluetooth bears - see this link or this link for example. Others are being planned - link EDIT: apparently the day I published this was "National Teddy Bear Day" link . A complete coincidence, but very amusing! )

But now think a little more closely about the user-journey, the design and sale process, the economics, and the new value-chain that needs to support the mBear's creation, distribution and use.

Where does the bear get purchased? Presumably, nobody's going to go to a phone store to buy a soft toy. They'll get it in a toy shop, or perhaps online. As it's a tactile, soft product, a lot of people will want to touch it first, compare it with other unconnected bears, decide if the extra cost of the electronics is worth a perhaps-lower grade of stitching and fur. 

How many toy-shop sales assistants are likely to be able to describe the benefits of a connected bear? How many will be able to advise on how to get it connected, what happens after the initial data-included period ends, or talk knowledgeably about service plans?

The bear, of course, has no display. So any configuration and setup will need to be done from a PC or mobile app, or in-store (good luck with that, at 9am on Xmas morning). Is there some sort of "connectivity app-store", where you can choose which network you want the bear on? Can you add it to a parent's existing multi-device cellular plan, or a family plan? Can you set up an entirely new subscription if your normal operator doesn't support eSIM and remote provisioning? How do you register your ID for countries which require it? Your ID or the child's? Do you need to connect the bear to WiFi first, or use Bluetooth from your phone, in order to boot-strap the mobile provisioning? Can the eyeball-cam scan a QR code from your phone, perhaps? 

How exactly does the provisioning work, and is it the same process used by the mToaster the parents also got given as an Xmas gift? Actually, who's responsible for the bear's connectivity if it was given to the child as a gift by a relative? (Who perhaps bought the bear overseas). What does the "user licence" say and who agrees to it? What security issues might arise? [See this link, for a non-cellular connected bear]

Are there different data/voice-plans for the bear? Does it offer postpay and prepay? Are they available on all carriers or just one? How is this displayed in the store? Does it support roaming, when the family goes on holiday? At what price, and how is this notified? If the "call" button is permanently on because the child is sitting on the toy, what happpens next?

What about returns? If the arm falls off the bear a week after Xmas, and the eSIM has already been activated, what happens when the customer returns it to the store? How is the number/SIM ported to a new bear, perhaps of a different design? What happens if the child's playroom is in the basement and there's no coverage? Can the network be switched? Can the customer get a refund? Who pays and how?

There are also questions about the design and manufacture process. Who decides to make the bear? A normal plush-toy company? A mobile device maker? (iBear?) Someone who sets up a Kickstarter campaign and then contracts a manufacturer? How do they select a module & design the rest of the system (eg battery)? What extra cost does this add? Are there enough operators supporting remote provisioning and eSIM? Is a standard-SIM version needed, or perhaps one that's WiFi-only and tethered to a nearby phone or in-car cellular radio? Does the toy's packaging need to be different as it's now a cellular device? How is it classified by shipping companies - as a toy, or a "phone"? What certifications are needed at what point in the process? What import/export duties apply?

You get the picture. It's all much harder than the initial picture suggests - partly because of the cost of the cellular radio irrespective of SIM type, but also because of real-world user journey and practicalities of eSIM. There are plenty of other issues I haven't mentioned here.

For some eSIM use-cases such as connected cars, and perhaps tablets and mi-fi type products, there's an existing channel and business model. Remote provisioning can simplify this, take costs out, add the ability to switch networks and so on. 

But for many other new categories of IoT, both consumer and B2B, there are huge complexities that will need to be worked through. There will likely be several years of clunkiness, false starts and unanticipated problems. These may not be insuperable - but they may well prove costly to solve. 

The problems will also likely vary by device category and target audience - imagine re-writing this post about a fridge, a VR headset, a bicycle lock, a drone or an industrial oil-pump. eSIM in smartphones is much harder still. Just standardising the remote-provisioning part of eSIM does not solve the myriad of other issues that "connecting" IoT devices with a cellular radio entails. In many cases, it will be simpler just to stick with WiFi or Bluetooth, especially for toys mostly used when parents (and their phones) are around.

Such issues are why I'm forecasting a slow start to eSIM, and patchy adoption in new IoT categories. (And also why lack of eSIM in the iPhone 7 was not a surprise). It will gradually be sorted out - by 2021 there could be 1 billion eSIM-enabled devices - but it certainly won't be a game-changing shift overnight.

These posts highlights some of the issues and concepts that are covered in the new Disruptive Analysis eSIM Market Status & Forecast report (link). Please get in touch at information at disruptive-analysis dot com, if you are interested in the report, strategy workshops, or speaking engagements. I'll also be chairing a conference session on eSIM & eUICC at the Smart Security conference in Marseilles on Sep 28th (link)

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