IoT adoption of eSIMs to grow 780% in the next three years

Internet of Things (IoT) connections using eSIM technology will reach a volume of 195 million by 2026, up from just 22 million in 2023 — a 780% growth over the next three years globally. And driving the growing adoption of eSIM over this period will be the “eIM” or eSIM IoT Manager segment, according to a recent study by Juniper Research.

eSIM (embedded SIM) technology defines a programmable chip that can be integrated into any type of mobile device. The main difference with the traditional SIM card is that it is independent of the operator and can be programmed by software. In turn, eIM was established by the GSMA under the SGP.31 specification in 2022 to define the architecture and requirements to facilitate the deployment and management of eSIM-enabled IoT devices on a large scale.

The main benefits provided by the new specification is to expand the use of eSIMs to the IoT market by simplifying the architecture and integration processes. Consequently, IoT solution providers will be able to accelerate time-to-market and offer easier management processes because of standardisation.

According to the Juniper Research report, current eSIM provisioning solutions such as SMSR (Subscription Management Secure Routing) have hindered the growth of eSIMs in the IoT market by limiting the number of devices that can be provisioned and managed through a single interface. On the other hand, eIM solutions will reduce the cost of deployments by allowing multiple connections to be deployed simultaneously. This will make the value proposition of eSIM use cases requiring mass deployments much more interesting from a financial and operational point of view.

The potential behind eIM is huge, given that only 2% of all eSIMs in use will be attributed to the IoT sector by 2023, according to the study. With increased adoption of eIM tools, the growth of eSIM connections for IoT over the next three years will surpass that of the consumer sector which includes smartphones. By 2026, 6% of eSIMs will be attributable to the IoT sector globally.

The report identified two main sectors that will benefit from eIM: logistics and oil and gas extraction. By 2026, these two markets are expected to account for 75% of eSIMs in use globally, due to the use of mass deployment processes and reliance on LPWA (Low Power Wide Area) networks.

Trends among IoT connectivity providers

A recent study by Transforma Insights took a detailed look at the strategies and capabilities of 23 cellular network-based IoT connectivity providers to identify key industry trends and best practices and innovations.

The study highlights that a time of major transformation is underway in the provision of IoT connectivity, especially when it comes to connecting devices across countries.

One of the changes has to do with the possibility of more players entering the market and ensuring more innovation, as connectivity is now taking place in the realm of software and less and less in the spire of physical cards.

Multi-country connectivity is in a period of transition, moving from the old world of sponsored roaming and physical exchange of SIMs to a universe that uses eSIMs and other more refined localization options. The trend is for the situation to improve gradually, according to the study. NB-IoT and LTE-M will emerge as market-leading technologies, but there are still issues with coverage, optimization and roaming.

Scalability is increasingly the watchword for IoT connectivity. In the view of the research, using the cloud and virtualizing platforms and network elements is clearly critical in this process. Contextualization is also important, so IoT connectivity providers need to understand customer needs and adapt to them by providing a suitable service package. They should look for revenue opportunities through value-added services such as security, compliance, and analytics. Another reminder for connectivity providers is not to forget about devices, as there will be increasing overlap between the two markets.

As with many surveys, there is no answer to the question of “who is the best connectivity provider” because there are numerous factors involved, such as the resources required, the location of the project and the underlying business models.

However, it is possible to identify good practices in the field of IoT connectivity. More specifically, the study aimed to reveal more scalable, compatible, transparent and/or future-proof approaches, for example, and was based on six elements:

1. Capacity for deployment in several countries

2. Scalability of the platform and the main network elements

3. Global traffic management

4. Connectivity management features

5. Commercial resources

6. Multi-carrier compatibility (use of technology other than regular 3GPP terrestrial cellular, such as private mobile networks, LoRaWAN and LEO satellites)

The survey also considered best practices in IoT services associated with connectivity, such as device and cloud/edge management, integration with business, security, compliance, and contextualization.

In the Transforma Insights ranking, Vodafone came out on top in both the IoT connectivity and IoT services criteria. Other large MNOs (mobile service providers) also scored well, including Deutsche Telekom, NTT, Telefónica, Verizon and Orange. In particular, the good scores were in broader IoT services, reflecting scale and presence in other ICT areas such as security and broader consulting.

In contrast, IoT-focused MVNOs are much more focused on pure IoT connectivity and do a good job in that field, with more innovation. These include 1NCE, Emnify, Eseye and Wireless Logic and KORE.