Analysts say the travel boom and the slow but steady phasing out of physical SIM card slots by smartphone makers such as Apple are driving the surge in eSim adoption.
Ankit Malhotra, senior research analyst at global technology research firm Counterpoint, said more than 6 billion eSim-enabled devices are expected to be shipped by 2026.
“No one wants to lose a customer,” he said.
Traditionally, smartphones have relied on physical SIM (Subscriber Identity Module) cards, often the size of a fingernail, to connect users to phone and data plans.
Physical Sim cards have been popular for many years, but they are also a source of frustration, especially among international travelers.
When you arrive in a new country, it's still common to go to a store for the first time, buy a SIM card, and carefully install it into your phone.
In contrast to innovative smartphones, this tedious process is a hassle for many people.
Users can quickly switch phone providers using eSim (Embedded Sim) technology.
“Earlier carriers were not very keen on implementing eSim as they thought it might alienate subscribers,” Malhotra said. The technology has been around since 2016, he added.
The usability of eSim technology is changing dramatically by allowing carriers to display their networks in the eSim app.
“The iPhone in particular is clearly moving in that direction and they're working towards it,” Malhotra said.
He added that while iPhone models have supported eSim technology since 2018, the introduction of the iPhone 14 in 2022, when the U.S. version did away with the physical SIM card slot, was a turning point.
Sim cards and Sim card slots are still prevalent in smartphones, but many in the premium category now support eSim.
Adoption of the technology was also spurred by so-called post-pandemic “revenge travel,” Malhotra said.
“That's the biggest use case,” he says.
“If you want to go on a seven-country tour, you can use eSim through a mobile virtual network operator (MVNO), which allows you to use your phone in seven countries instantly.”
Malhotra said MVNOs operate without a physical footprint.
“They do all their business online… They are creating apps and can serve millions of smartphone users around the world,” he added.
Riding the wave of the MVNO boom is Dina Tsybulskaya, CEO and chief strategist at Lithuania-based eSim Plus. eSim Plus describes itself as a mobile data and virtual Sim company with over 3 million users.
“I switched from traditional communications,” said Tsybulskaya, former CEO of Telekom Romania Mobile. “This is the future, and it's going to be global…and it's looking bright.”
Tsybulskaya predicts that by 2027, 80% of smartphone users will own an eSim-enabled device.
“We will be fully digitally connected and able to connect at any point in the world,” she said.
According to her, the adoption of eSim technology in the GCC is one of the strongest in the world.
“This is one of the fastest growing markets of all regions,” she said.
“This region has become very attractive to people known as digital nomads… who are tech-savvy and well-travelled.
It's a perfect match.
Is there room for growth?
eSim technology certainly has momentum, but that momentum is largely confined to the premium smartphone market.
“The market is still developing and is far from saturated at this point,” Malhotra said. “If you're going for a low-budget or low-budget smartphone, eSim probably won't reach that range yet.”
The technology is most widely adopted among high-end iPhone and Samsung Galaxy users, he added.
Tsybulskaya agreed that physical SIM cards are still the norm in low-end smartphones.
“If you remember a while ago, that was the case with 5G,” she said, referring to the proliferation of faster wireless communications.
“It was very premium.”
Tsiburskaya said she is confident eSim technology will follow that pattern.
“It's going to be very common and it's going to be cheaper,” she said.
Importance in conflict areas
Amid the wars in Gaza and Ukraine, eSim has also proven critical in ensuring communications continue during power outages, internet outages, and data jamming.
Efforts to avoid telecommunications outages prove effective using eSim technology
eSIM cards help keep war-torn Gaza online
Simly, a Dubai-based telecommunications company founded in 2022 with offices in Jeddah, Beirut, Baghdad and Erbil, offered free eSim accounts “to help families in Gaza communicate with each other” .
The company said in an Oct. 28 Instagram post that it raised more than $70,000 in 24 hours to help restore internet connectivity in Gaza through eSims.
Through the company's app, you can purchase various eSim plans in Turkey, Spain, UAE, Saudi Arabia, France, Palestine, and other countries.
“Hundreds of eSims have already been distributed and successfully connected to civilians, journalists, and doctors near the Gaza border,” the company said on Instagram.
However, purchasing and distributing eSim plans also depends on getting information to those affected by power outages.
Nevertheless, Tsiburskaya said the ability to quickly switch phone and data plan providers in both Gaza and Ukraine shows the wide-ranging benefits of eSims.
“It could be earthquakes, it could be flooding, it could be conflict, and the infrastructure is vulnerable to crisis,” she said. “Through eSims, you can instantly see who still has coverage and which providers are still working. You have the opportunity to switch immediately.”
Updated: March 14, 2024, 3:00 a.m.
