New Disruptive Analysis Report & Forecast on eSIM: Pre-Order Discount

I'm in the final stages of preparing a report on the status of the eSIM market, including forecasts for adoption and installed base, out to 2021.  

The report will focus on the use-cases for eSIM, and consider the drivers for, and barriers to, uptake in different sectors, including smartphones and IoT/wearables.

It'll be published in the next week or two after editing is complete, but if you wish to pre-order it, I'm offering a 15% discount, until publication date.

Some preliminary outputs:

• There are numerous potential use-cases for “remote provisioning” of SIMs with mobile operator “profiles”, especially where the SIM hardware is built-into devices.
• However despite theoretical benefits, eSIM adoption will have a slow start. 
• 2016-17 deployment will mostly be early concepts, to allow operators and OEMs to gain experience of eSIM practicalities and refine implementation and processes. 
• The market will then ramp up in 2019-2021 as cost, industry value-chain and user-experience problems are progressively solved.
• In smartphones, eSIM adoption will be very gradual, driven by slow maturity of good user-experience of choosing an operator/plan, and the costs of implementation & support vs. device margin. In many ways, eSIM will be aligned with 5G's arrival, not 4G maturity. 
• Apple may well be the eSIM king-maker - but will be conservative in adoption, especially in its iPhone flagship, where the near-term risks outweigh any benefits.
• For many M2M/IoT devices, the eSIM decision is secondary to justifying the extra cost, space and power needs of the cellular radio itself. (As I discussed in February - see link here)
• There remain unanswered questions about regulation, customer-support and business model for eSIM. Although some projected cost-savings or additional device connections are attractive for operators, it is unclear that OEMs will generate extra revenues quickly & painlessly enough, for them to support the technology in new mainstream devices.
• eSIM is occurring alongside other technology trends in mobile - SDN/NFV virtualisation, LPWAN & LTE Cat-0/NB-IoT for IoT and so forth. It will need to coexist and be co-developed, which may bring additional complexities.
• Alongside eSIM, we will also see continued innovation in other areas of SIM technology, both standardised and proprietary. Some use-cases (eg temporary/cheaper roaming subscriptions) can be offered using other approaches such as multi-IMSI MVNOs, or (less securely) early soft-SIM variants
• Chicken-and-egg problem: until most operators support eSIM, handset vendors will still need removable SIM slots as well, or else produce multiple device variants
• Definitions of "eSIM" need to be carefully examined. Many people do not understand the nuances and make inaccurate or confused predictions.
• By 2021, over 500m mobile & IoT devices will ship with embedded, remotely-provisioned SIMs annually, driven mostly by smartphones, although vehicles and tablets show growth earlier
• By end-2021, the installed base of eSIM-enabled devices will exceed 1 billion - although that is little more than 10% of the overall cellular universe at that time

The report is based on a large amount of primary research undertaken in recent months, among a broad cross-section of service-providers, vendors, industry bodies, regulators, startups and other commentators, as well as many years of analysis of SIM innovation (eg multi-IMSI SIM cards, which I first looked at more than 7 years ago - link). 

It examines both drivers and inhibitors of adoption, from the perspective of MNOs, OEMs and end-users. In particular, it covers a broad set of technical, commercial and regulatory issues that need resolution and experience, before eSIM can become a massmarket offer.

The report will be approximately 35 pages in length, and is aimed at strategy executives, CTOs, CMOs, enterprise architects & planning/operational staff at communications service providers, SIM & network equipment & software vendors, device vendors, investors, regulators, integrators, developers and similar organisations.

THE PRE-PUBLICATION DISCOUNT HAS NOW EXPIRED. PLEASE CLICK HERE TO PURCHASE & FOR FURTHER DETAILS.

Google buying Jibe Mobile is aimed at turning RCS into Android's iMessage

Like a lot of people, I was surprised by Google's acquisition of RCS specialist Jibe Mobile yesterday. Lots of theories were advanced on Twitter and blogs about this last night:

• Wow, Google is recognising that carrier standards, RCS and IMS are the future!
• Meh, it's an acqui-hire for people who understand messaging on Android
• Hmm, forget RCS device-side apps, Jibe offers cloud-based RCS servers to operators - it's Google's opening NFV play! (me)
• It's Google trying to get US carriers to push Android devices more, by acquiescing to demands for native RCS support (even if Google privately thinks it's rubbish)
• It's Facebook- and TenCent-envy. Google thinks it's missing out on messaging-as-social-platform as its previous efforts have been failures (also me)

On reflection I actually think there's a different story here. 

Forget telcos, the GSMA and 3GPP. Google buying Jibe Mobile isn't about carriers at all. They're a sideshow, or perhaps "useful idiots" in this scenario.

Google (I think) has three competitors in mind: Mostly Apple, but also Microsoft and Twilio.

First, let's step back. There are various uses for "messaging" apps on smartphones:

• Basic P2P or A2P text messages, ideally with features like read-receipts & pictures. And ideally free
• Enhanced messaging (not "rich") with better support for things like groups, white/black-lists, security, maybe "ephemerality" etc. Think of WhatsApp, BBM, Telegram and so on.
• Cool messaging (again not "rich" although they might use pictures or video) - things aimed at "lifestyle", flirting, self-expression, teenagers, and perhaps content streams. Instagram and SnapChat go here.
• Messaging as a platform, where users don't just send messages but can also use mini-apps or plug-ins inside the system for purchases or collaboration. WeChat and arguably Slack (in enterprise) fit in this category
• Messaging-as-a-feature, where messages get embedded into other applications or services via APIs, or are implemented natively. Twitter direct-messages are an example, but there are many others - perhaps even including iOS and Android push notifications.

These are imprecise categories. They overlap, and app providers try to push up from one type to the other - for example the content channels on SnapChat.

But right at the bottom of the list is basic P2P messaging. Traditionally the home of SMS (& MMS). It's been cannibalised in a lot of places by WhatsApp or close equivalents, although in places with flat-rate charging for SMS it's been more robust. But there is one important other player here: Apple iMessage, which gives an SMS-integrated experience built into iOS. iMessage is a well-designed, moderately "enhanced" version of SMS that is free between Apple users and has some better features (delivery notice & typing-awareness) than ordinary SMS whilst having a near-identical UI.

While Apple doesn't monetise iMessage, it makes usng iPhones a bit nicer. It does what the telecom industry should have done 10 years ago, and improved SMS without focusing on "multimedia" as a first step. It's the little things that count in messaging - ticks when someone has read something, an indicator that they're composing a reply and so on. Fripperies like file-sharing and "see what I see video" are irrelevant in 99.99% of use-cases. Get the basics right - usable texts & the occasional picture. Maybe an audio-message function for people with awkward languages that don't fit keypads & predictive text very well.

Now Google has had its own Hangouts messaging app on Androids in the past, which can be used as a default SMS app as well. But compared to iMessage, it hasn't been especially well-received, as it's optional. This means that Apple's automated and familiar green-becomes-blue messaging experience for Apple-to-Apple communications hasn't really been replicated in Android.

I suspect that acquiring Jibe Mobile (with RCS) is an attempt to change this. I think Google wants to use a service which handset vendors already accept being integrated "natively" to become its own free Android-to-Android messenger.

The fact that the mobile operators want RCS to be natively implemented is even better - Google gets the telcos to lean on all the handset OEMs to accept it. 

But of course, the devil is in the detail of the implementation. I suspect that a future version of Android will support RCS as a default app not because of its "richness", and not because of its "interoperability", but because it allows Google to compete with Apple on basic device-to-device enhanced and free texting. Messaging that goes via its own cloud most of the time, or which might interact with the telcos' networks either for "AndroidRCS-Out" or fallback to SMS. 

In other words, this turns RCS from being a "service" into being a basic messaging function within Android. It's not about "richness", either - video chat on Android will still be on Hangouts and via its WebRTC support 99.9% of the time. Google undoubtedly knows that RCS isn't really the basis of a "cool" messaging service either - I highly doubt it wants to compete with SnapChat, at least to begin with. It's not about lifestyle or messaging-as-platform - just a well-integrated way to do free basic messages.
 
So my views is that this is all about creating Google's iMessage, not a ringing endorsement of telco-run RCS or IPX or any of the other industry machinery. The telcos may get the scraps of RCS-in or RCS-out, most of which will be converted back to plain old SMS to terminate on iPhones, or older Androids.


There's also a secondary set of targets here, I think: B2C, B2B and A2P messaging. I'm sure that Google has noticed Microsoft linking Skype and Skype4Business and its other cloud properties. In future, businesses running Microsoft-powered UC or contact-centre software will be able to directly reach out to end-users via Skype, bring messaging, video, presence and so on. I don't think MS really cares so much about person-to-person Skype any more - it's nice, but not really monetised and faces lots of competition. But B2C Skype is different, if it entrenches Microsoft's enterprise platforms and gives businesses a rich (and free) way to talk to customers. Goodbye toll-free numbers, for a start. It also helps Microsoft become a more full-fledged UC player for internal enterprise communications.

I think that Google wants to do the same thing, linked to Google Apps for Work and other services. And having a native "AndroidRCS" (not "TelcoRCS") capability in every device will help. So perhaps, Jibe is intended to become Google's equivalent of Skype. And again, the likely majority scenarios would be internal within the Google ecosyste, plus a small minority of in/out to the telco (or enterprise SIP) domains.

Lastly, I wonder if this is an oblique way to compete with Twilio and a few other PaaS providers. Using a cloud-based messaging platform linked to a native client in Android gives a whole set of possibilities for developers to do free A2P messaging - basically a version of push notifications for people who don't have an app installed. Or easy, free web-to-device notifications (something missing in WebRTC when the user is outside the browser). And again, there is little reason to involve the phone networks except as exceptions or gateways to/from SMS on other devices.


In summary - this isn't a win for GSMA and RCS. It's not "fighting back against the OTTs". It's not going to suddenly revolutionise the market for messaging and promote the hoped-for renaissance of subscribers paying for "richness". It's not about video-chat or filesharing. It's not about QoS. It's not going to compete against SnapChat or Instagram or WeChat. (That traffic has gone to apps that are simply better and cooler. It might get a bit of basic text back from WhatsApp, but not much, as that's the cross-platfom winner in markets with a mix of Androids and iPhones).
I believe that, in fact, this is Google "stealing" RCS for its own purposes - free basic Android-to-Android messaging, with free B2C and A2P messaging to follow. It can vault into the big league with a billion AndroidRCS text users. The amount likely to touch the telcos' IMS's will likely be minimal. And the GSMA has done all the hard work encouraging the handset OEMs to support it. Thanks guys.

(And of course, there's also the very high probability that the whole thing is a total dud, or that users just ignore it, or only gets implemented in a sub-set of Android devices. Google's record here isn't great - think about Wave and Google+ debacles)

Dean Bubley & Disruptive Analysis specialise in analysing the future of voice, video & messaging, including VoLTE, WiFi-Calling, WebRTC and Contextual Communications. If you are interested in a private advisory workshop or project, please contact information AT disruptive-analysis DOT com

Apple Upgrade - will carrier activation be done with an eSIM or Apple SIM?

The iPhone 6s still has an ordinary SIM slot. Next year, I predict that the iPhone 7 will still have an ordinary SIM slot too. 

But Apple's new Upgrade installment plan that allows people to get a fresh new smartphone every year might change the SIM in the longer term. It's US-only to start with.

There is also a possibility of a removable Apple SIM as part of the Upgrade plan - a similar concept as the one in last year's iPad. That's more likely for next year rather than this year.... but at the time of writing this post (11th September 2015) Apple still hadn't put up the full details of how "carrier activation" would work on the web, so it's *possible* that there will be a surprise coming much sooner (maybe even tomorrow, when pre-orders start).

There is also a possibility that the iPhone 7, next year, will have an embedded "eSIM", although it would also need to have a proper SIM slot too, or at least two versions to choose from.

The Upgrade programme makes a lot of sense - most US carriers now have some form of installment plan for smartphones, rather than a bundled-in "subsidy". That's actually been part-driven as an effect of changing accounting rules, which restrict the bundling of products and services in reported revenues. See this article here from last year, and my own 2007 post where I mused about the economics of phone subsidies, here.

The Upgrade plan allows customers to get their iPhone finance plan from Apple, rather than through AT&T, Verizon, T-Mobile or Sprint. (For Apple, it's actually a lease underwritten by Capital One). The one-year cycle allows Apple to potentially increase revenues, while running this through the Apple stores removes the risk of last-minute switching to Android devices, with a nudge from a carrier salesperson who's been incentivised to pitch Samsungs.

But a couple of things are left unsaid at the moment. When Apple talks about setting up and "activating" your phone on the carrier of your choice, what does that actually mean? 

For some users, it will just mean taking the SIM out of your existing 5s or 6, and popping it into a shiny new 6s. But what if you want to switch to a new carrier - or perhaps a new plan? Will the Apple store keep a stock of SIMs from all the carriers and activate them on the spot, like an independent phone shop? Or.... will it perhaps use Apple's own SIM, with a remote-activation setup menu as on last year's iPad? [EDIT: it has been pointed out to me that Apple already stocks some SIM cards in its US stores. Question remains though, which plans? Including prepay or just normal multi-year contracts?]

[My take on the Apple SIM last year was posted here. As I argued at the time, it has not been a big deal. Other carriers have not signed up, beyond a provider called GigSky, which appears to work with major global carriers like Digicel and Vodafone on a roaming basis]

In theory, and with the cooperation of the carriers, the new 6s could work with an Apple SIM card as well. Rather than walking out of the Apple store and then going to a carrier store for a SIM separately, it would be easier to just remotely download and activate a "profile" on either a blank (Apple-branded) SIM, or in future, to an embedded SIM chip inside the body of the phone. Ideally, Apple would love to do away with the design compromises from cutting a slot in the device, reclaiming space and removing a clunky mechanical component.

However, various scenarios here would require some complex behind-the-scenes processing, like porting your existing mobile phone number, and also maybe dealing with contract termination fees. This is why I have my doubts that it will happen this year, and even next year will have some headaches. They're not insurmountable for Apple - but they probably are insurmountable for others, for anything other than IoT-type deals like Samsung's Gear S2 watch with eSIM from last week.

Either way, whether it's this year or next, the Upgrade plan gets customers used to the idea that you "activate a carrier" on an iPhone bought from Apple. And given that there is no subsidy or payment plan from the carrier, there is no justification for 2-year contract plans, either.

If you have an unlocked iPhone, you'll be much more amenable to getting a rolling and cancellable 1-month contract (already popular in the UK and elsewhere, but less-so in the US) or even a full pay-as-you-go prepay account. You might even choose to go for a data-only SIM, and "bring your own voice".

In that scenario, it actually doesn't really matter (for now) which SIM model Apple uses:

• Swap out your existing SIM & put it in the new iPhone, in the Apple store
• Buy a SIM from a carrier store & put it in the iPhone
• Buy a SIM sold in an Apple store & put it in the iPhone
• Get a removable Apple SIM supplied with the iPhone, activate a carrier if it's chosen to be on the menu, or else take it out & buy a separate SIM as per the options above
• Have an eSIM inside the phone and activate a carrier of your choice, if they're on the menu. (If not, then there's probably a version with a proper SIM, as some countries' operators won't all be eSIM-ready anyway).

Long, long term (maybe 2020 to coincide with 5G) we might get to the "promised land" (or dystopia, depending on your viewpoint) of fully virtual SIMs, but don't hold your breath.

The problem with the eSIM / downloadable Apple SIM type model has always been getting carriers to agree to be involved. I've been skeptical that the model had legs, because of this. But the installment / upgrade plan - and Apple's footprint of own-brand stores - seems to be a victory thought up by a clever game-theorist.

One of the carriers will likely agree to in-store activation on Apple SIM / eSIM - or at least, agree to having their SIMs stocked in Apple's retail outlet. It saves customers a second shopping visit. And then the other carriers may be forced to follow suit. Given that at least *some* people will be able to activate their 6s "on the spot" by simply swapping out their existing SIM, there's even greater incentive to use the Apple Store as a point of decision, if you're trying to capture people ready to churn.

Apple has essentially flipped the cellular sales model on its head - rather than a Verizon/AT&T salesperson having the power to convince a user to switch to a Samsung in a carrier store, it's now in a position to convince users to switch to a different carrier, in an Apple store.

The interesting line on Apple.com is this: "Because the iPhone Upgrade Program isn’t tied to a single carrier, you don’t need a multiyear service contract. If you don’t have any carrier commitments, you’re free to select a new carrier or stick with the one you have. A Specialist can answer questions and help you set your iPhone up the way you like." Note the absence of the word SIM, and the phrases "select a new carrier" and "set up your iPhone". That's rather significant - it implies the SIM is available in-store, in some fashion, for the carrier to be "selected".

So in many ways, the actual SIM mechanism is irrelevant here - it's the retail footprint that matters. Lots of carriers are worried about the eSIM / Apple SIM meaning they "lose ownership of the customer", but the truth is more prosaic: it's the physical store that's the point of control / decision, because it plays to the human psychological need for instant gratification. Even online purchases are clunkier - unless you have same-day delivery, there's an in-built lag for activation anyway. Of course, it's also important that other device vendors don't have a similar retail presence.

Now obviously, the Upgrade plan isn't actually needed here. Nothing stops people from walking into an Apple Store and buying an unlocked phone at full retail price & getting a SIM card however they want anyway. But in the US at least, that's still very much a "minority sport", because of the price tag involved. It's just not how people buy phones, when they're accustomed to an apparently "free" or cheap handset. The monthly plan - and upgrade cycle - might change that, as it alters perception. It's also a clever lead in to some form of programmable SIM card, when it's worked out the various kinks and practicalities.

I suspect that Apple isn't 100% sure how customers will take to this. And it's probably ironing out various kinks and complexities with any sort of remote activation. It may want to wait until all the carriers have back-end systems capable of handling it, rather than risking relationships by jumping the gun with just one or two. Again, the game-theorists are probably trying to work out how to avoid one or more carrier stopping selling iPhones entirely in their own stores, which would have definite negative impact, in the short term at least.

My view on programmable SIMs / eSIMs is that business model is pretty much unworkable, except, perhaps, for Apple. Let's see what happens either next week, or next year.



I've been doing a lot of work thinking about SIMs, eSIM, programmable SIMs, multi-IMSI and so forth recently. Over recent months, I've done a variety of private consulting projects and presentations on my thoughts on SIMs. I've been looking at the announcements, and also considering what the commercial, technical and regulatory implications of various evolution paths might be. If you're interested in a workshop on this, please get in touch via information AT disruptive-analysis DOT com