Accelerating adoption of embedded SIMs (eSIMs) is poised to reshape the cellular IoT landscape, according to data and analytics company GlobalData.

As the virtual evolution of traditional SIM cards, eSIMs offer benefits such as cost reduction, operational efficiency and enhanced security. As eSIM adoption gains momentum, it is set to impact various aspects of the cellular IoT ecosystem, influencing market dynamics and contributing to the continued growth of cellular-based options in the enterprise IoT services market.

In the case of eSIMs, the subscriber identification is downloaded to an embedded universal integrated circuit card (eUICC). Functioning as a software-based option, eSIMs will soon be able to take advantage of a new industry standard that empowers remote deployment and programming. This flexibility enables cellular operators, device manufacturers, users or third-party eSIM managers to programme devices seamlessly for network operator switches, eliminating the need for physical SIM card replacements.

“ESIMs have been around for a few years, but it is fair to say that before now there has been much more enthusiasm on the part of users and device makers than mobile network operators, which have viewed them as a threat,” said John Marcus, senior principal analyst at GlobalData (www.globaldata.com). “That is starting to change, following the publication of a new industry specification for IoT eSIM earlier this year.”

GlobalData analysis found several benefits of eSIM adoption in IoT, including cost reduction for operators, users and device manufacturers, diminished hardware and operational expenses, simplified installation and deployment processes, heightened flexibility, and improved security.

“While eSIM represents nothing but upside for manufacturers of IoT devices and connected products, the trend is likely to impact, one way or another, all areas of the cellular IoT ecosystem,” said Marcus.

According to GlobalData’s most recent forecast, cellular-based options will continue to account for the largest slice of the enterprise IoT services market through 2027, growing slightly faster than the overall market at a 17.3% CAGR. ESIM adoption will be driving part of that growth, along with upgrades from 2G and 3G switch offs, 5G adoption, and private cellular connectivity.

The report notes the GSMA’s SGP.32 eSIM specification, designed specifically for IoT, replaces the old M2M eSIM standard, offering simplified remote provisioning with an IoT manager module and an embedded IoT provisioning assistant. The automated profile switching capabilities of SGP.32 present numerous advantages for OEMs and users, including increased flexibility, longer lifespan, lower costs and benefits for device makers, fostering global product development.

“In addition to the positive implications of automated profile switching enabled by the standard, it brings challenges such as the potential for increased competition for IoT service providers and a shift in control dynamics among the operator, SIM and device,” said Marcus.