Gemalto notes ecosystem-wide benefits to the use of eSIMs in wearables
Since the launch of smartwatches – first Pebble, then Samsung Gear and now Apple Watch – the wearables market has expanded beyond mobile health and fitness trackers to mass consumer devices that are packed with cool features and capabilities. Prices are coming down, simplified software development tools are enticing developers to create apps, and devices are more powerful and user friendly than ever before. IDC estimates 72.1 million wearable devices will be shipped in 2015, up more than 173% from 2014. The compound annual growth rate is projected at 42.6% over five years reaching nearly 156 million units shipped in 2019.
While wearables are making an impact and look promising for device makers and developers, would-be adopters are still uncertain how all these new devices and form factors will fit into their increasingly digital lives. Some are questioning if wearables will add value or simply add complexity with additional screens and service plans to manage.
Pebble and Apple initially addressed this challenge by tethering wearable wristwatches to smartphones, reserving certain smartwatch capabilities only when in close proximity to the “parent” device. For device makers, this solves the connectivity challenge and eliminates the dilemma of bundling carrier services in each device. The tethered approach also keeps it simple for the consumer by combining all devices onto one subscription and avoids the cost of an additional service plan. However, one of the greatest benefits of wearables is that they are always with you, even when a smartphone may be forgotten in the office or car. What happens when consumers want to use their wearable device whenever and wherever they are – in lieu of a smartphone? As an example, Samsung moved in this direction for their recently launched Gear S2 smartwatch that allows consumers to make voice and data calls, check email, retrieve notifications or access applications directly from their wrist, without being tethered to their smartphones.
In theory, the simple solution is to add a SIM card (also known as a UICC) and a communication module to enable native device connectivity. But, in practice it’s not that simple and it leads to a host of new challenges to overcome. For instance, wearable devices are miniaturized for comfort, portability and to capture an aesthetic more common in high fashion than high tech. In addition, they are ruggedized to stand up to a variety of demanding environmental conditions not encountered by your typical tablet or smartphone such as humidity, sweat, vibration and shock. Adding a traditional SIM card slot to a smartwatch design would take up too much space, and asking a consumer to crack open the ruggedized form factor would jeopardize the integrity of the device and create a nightmare for the warranty and repair department.
To address these challenges, leading-edge device makers and network operators innovated miniaturized and reprogrammable SIMs, also known as eSIMs. This technology has its roots in the industrial machine-to-machine market where operators like T-Mobile US have already launched an eSIM product for their customers to simplify inventory management and logistics. As wearables have started to gain traction in the consumer market, so too has the eSIM. They can be soldered into the device at the time of manufacturing as an alternative to the pluggable SIM card, which saves space in device design and improves the durability of the device at the same time. However, if an eSIM has been soldered into the device, it cannot be removed easily and replaced with another device. Since SIM cards house carrier-specific credentials, security algorithms and software, this creates new headaches for manufacturing, reverse logistics and the secondhand market as different device variants would be needed for each potential carrier partner, i.e., one version for Verizon Wireless, one for AT&T Mobility, T-Mobile US, etc. Forecasting and producing carrier-specific devices is something device makers have to deal with on a regular basis, but it does put excess strain on the business plan as the risk of a forecasting error will have a direct impact on profitability as the complexity of refurbishment, warehousing and distribution would rise.
In response to this challenge, the GSMA is working on a new set of specifications for a solution that allows secure over-the-air downloading of carrier data to an eSIM. These would have the same functionality as removable SIMs – providing encryption capabilities and secure connectivity to wireless networks, and with this new solution, subscriptions can be remotely provisioned and managed. This subscription management solution simplifies and streamlines one step in the process of onboarding a device on the network and eliminates one of the hurdles device makers face in the design and manufacture of a single device variant for all carrier partners.
This dynamic technology duo – eSIM and subscription management – impacts all members of the ecosystem: device makers, consumers and mobile network operators. For device makers, these technologies make it possible to develop one device design compatible with many global networks – greatly simplifying manufacturing, warehousing and distribution for greater cost efficiency. For the consumer, the user experience is improved by making it easier to add devices to existing services plans centralizing a household’s fleet of new gadgets and reducing time spent waiting in line at retail stores or on customer service calls. For the carrier, this also opens the door to provide existing and new services to customers seamlessly across multiple wireless devices.
The eSIM and subscription management technology are revolutionizing the way connectivity is delivered to wireless devices by implementing a streamlined remote and dynamic provisioning process while ensuring secure user authentication and data handling. This simplified technology provides benefits across the entire wireless ecosystem, creating an important building block to support exponential growth in the wearable and “Internet of Things” marketplace.
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