London, May 11th, 2022 – Kaleido Intelligence, a leading connectivity market intelligence and consulting firm, has published its latest eSIM Market Outlook report, providing the most comprehensive analysis on the eSIM market available to date.

The study, which examines GSMA-compliant eSIMs across consumer and IoT markets, found that active xUICC (eSIM/iSIM) connections will grow over 1400% between 2022 and 2027, with growth heavily driven by smartphone users.

Meanwhile, over 630 million devices will be iSIM-compatible in 2027, based on GSMA-approved standards for that technology. While this represents only 20% of xUICC enabled devices overall, the power- and space-saving capacities will mean that the adoption rate is higher in the IoT, where these are more vital to device performance than for smartphones.

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New Specification to Drive Adoption through Lower Complexity

The advent of SGP.31/32, an extension of the GSMA’s consumer eUICC (eSIM) specification (dubbed as the IoT specification), is forecast to accelerate adoption of eSIM within IoT, due to the ability to leverage GSMA SM-DP+ architecture. This greatly reduces commercial complexity for customers wishing to switch between eSIM network operator providers. Additionally, the specification provides a path for LPWAN devices to leverage standardised remote subscription management capabilities more easily. The IoT specification is anticipated to be completed by the end of this year.

This simplified architecture will mean that by 2026 over half of all cellular IoT devices will either be using the consumer or IoT eUICC specification, with active connections growing at a CAGR of 80% between 2022 and 2027.

James Moar, Principal Research Analyst at Kaleido Intelligence noted: “The new specification is on the right path to mitigate the complexity associated with M2M eUICC, and will mean that eSIM for IoT is no longer simply for ‘insurance model’ purposes. However, broad consensus among service providers and enablers will be required for it to realise its potential”.

iSIM to Experience Rapid Growth

Kaleido anticipates that GSMA-compliant iSIM (an integrated form factor of eSIM) will ship from 2023, and grow to over 300 million shipments in 2027, representing 19% of total eSIM shipments. Although iSIM offers benefits in terms of power, cost and space-savings, the need to secure connectivity relationship at the manufacturing stage introduces complexity and will mean that iSIM will not become the de facto solution for eUICC deployments.

Nevertheless, Kaleido anticipates that iSIM adoption will gain strong traction within constrained IoT device use cases due to the benefits named earlier.

IoT Activation Rates to Reach 50% by 2024

In the smartphone arena, eSIM will continue to be seen as an adjacent connectivity choice for many years, where eSIM will not be activated in more than 50% of devices until 2027. In part, this is due to the fact that Kaleido does not expect a high number of eSIM-only smartphones to be produced, in order to mollify mobile operators’ concerns about subscriber churn.

IoT activations will be higher, and breach 50% by 2024, as device OEMs gradually adopt eSIM as a production simplification and business continuity measure. Although automotive remains a key vertical for the technology, Kaleido has observed notable acceleration in adoption in verticals such as smart metering and industrial use cases, while North America, Europe and East Asia are all seeing rising traction in active use of eSIMs in IoT devices.

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