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Why reports of the SIM card’s death have been exaggerated

by Andrew Brown | 11月 30, 2010

There has been much furore and inaccurate juxtaposition in the press of announcements by the GSMA and he SIMalliance over the last few weeks, trying to pitch a SIM card v embedded world, an angle that missed many of the key nuances around the announcements. these announcements were interspersed with rumours that Apple’s next generation of iPhone would not incorporate a USIM module.

With responsibility for looking into and forecasting the growth of the embedded market, these announcements got me interested. We have recently written about the consolidation among module makers in the M2M space, with SIM card players such as Gemalto, looking to move up the value chain into being a complete module player.

While the rumour about Apple’s next-gen iPhone is just that (a rumour), it seems as though the SIMalliance and GSMA are on the same page in their approach to the future of the SIM card, namely that personal devices and automated modules will require different means of distribution and activation, but that USIM cards will still have an important role to play.

We recently discussed in-depth the growing importance of M2M service platforms as a means of activating and managing the more than, Strategy Analytics believes, 4.6+ billion connections (excluding handsets and smartphones)  that will likely be in place by 2020. Many of these connections will be legacy M2M applications like smart meters and cars, but many will also be data devices like personal navigation devices (PNDs), tablets, eBook readers and laptops. what is clear is that the Embedded service platforms that are being built today for M2M applications, will tomorrow be used as the de facto means of activating and managing billions of connections globally, including handsets and smartphones.

It is clear that mobile operators are concerned about the possibility of the SIM card being replaced by a vanilla module/soft SIMs, as with it goes not only customer attachment and identity, as well as the SIM-only business, but also lowers the barriers to customers switching carriers and will force selection on key criteria such as quality of service, incentives and best tariffs/deals.

If Apple were to pursue this route, then it would clearly put the balance of power towards the OEM, reducing the power of the carrier. However, not only would this be just one OEM, but Strategy Analytics believes that this vision is over-simplistic and that the SIM market has a longer shelf life than some are predicting, with different distribution channels for high visibility consumer products and B2B M2M deployments (even if consumer activation, provisioning and management will be done via embedded service platforms). Moreover, while consolidation in the M2M module space suggests the model will change, regulation would likely slow the switchover considerably.

It is clear, however, that carriers need to think carefully about their embedded service platform strategy, as the question is less about SIM v embedded, and more about the next phase of building analytics into embedded service platforms to ensure consumer and business customers remain satisfied and that carriers can target them with the right products and services.

Andrew Brown

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