Apple Makes its Intent Clear – eSIM Only Smartphone Devices are the Future

Although not the first eSIM only device, that being claimed by the Motorola with its initial reboot of the Razr in 2020, in the fall of 2022 Apple announced its first range of eSIM only smartphone devices, for launch within the US market.

Although Apple has been utilizing eSIM within its smartphone devices since 2014, it had, to date, continued with a dual SIM approach, incorporating a removeable SIM slot alongside an eSIM to cater for all MNOs and to ensure continued global smartphone distribution.

With the end of 2022 fast approaching and with 2023 being the first full year of eSIM only Apple smartphone shipments into the US, a lot of questions are being raised as it relates to the future of the classic removeable SIM card.

With all US versions of the Apple 14 range of smartphone devices being eSIM only, a lot of questions that continue to be asked are related to the ongoing viability of the classical removeable SIM cards business, and the timeline to market reduction.

The market dynamics in the United States arguably provide a perfect testing ground for eSIM-only devices, due to high levels of eSIM readiness, maturity, and the fact that the US is a market of significant size, making the creation of a specific smartphone model for the US market more economically viable.

ABI Research has forecasted that Apple device shipments into North America will likely land in the 26 to 28 million range for 4Q 2022, with around 90% shipping into the United States. Although not all Apple shipments into the United States in Q4 2022 will be Apple 14 devices, it will be a large percentage, and this will directly impact shipment levels of classic removable SIMs.

Moving into 2023, this will be the first full year of Apple 14 devices in the US market and the year in which to expect a significant impact on the US classical removable SIM cards market. In terms of Apple device shipments, according to ABI Research, Apple shipped approximately 80 million smartphone devices into the North American market in 2021, and the market should expect a similar level of shipments in 2022, thus making it a significant disruptive force in the classical removable SIM card.

Although Apple will first limit deployment of its Apple 14 eSIM-only devices to the United States, it clearly outlines Apple’s intentions for an eSIM-only handset portfolio. Although not becoming available until 4Q 2022, the impact on the US market will be clear and more evident in 2023 with the first full year of Apple’s eSIM-only device shipments into the region.

Be warned: Apple has now made its intent clear and it is inevitable that Apple will eventually migrate all its smartphone devices to eSIM-only variants. It’s now a case of not if, but when, and the impact on the removable SIM cards market in the US will be clear and swift.

In 2023, the impact on the US classical SIM cards market will be clear, with ABI Research forecasting a growth reduction of near 50 million units, as it relates to the classical removeable SIM card. The rate of shipment decline over the forecast period will ultimately be defined by Apple’s planned eSIM only smartphone device expansion plans, alongside other Original Equipment Manufacturers (OEMs), which may look towards Apple as an example to which they replicate. Samsung and Google are the two other significant smartphone OEMs that have been championing eSIM and are the two most likely contenders as the next OEMs to launch eSIM only devices in the near future.

The US eSIM-only device launch is a significant milestone and an extension of Apple’s wearable's strategy, whereby its range of cellular-enabled smartwatches use an eSIM. This extends eSIM-only usage into its smartphone devices, helping Apple create a family of cellular-connected devices with mirrored applications and use cases using the same SIM technology.

Outside of the United States, the continued use of eSIM and removable SIM smartphone devices will enable Apple to continue pushing eSIM, while also supporting removable SIM cards for carriers that are not ready to fully make the switch.

If the US launch proves successful, Apple will likely look to expand its eSIM-only range and the regions to which it makes it available. With eSIM usage becoming more popular in regions like Europe and Asia, it is just a matter of time before Apple extends eSIM-only sales into other countries, most likely expanding into Canada and launching across several Western European countries, perhaps as early as 4Q 2023.

eSIM-only handset devices launching in Europe will further exacerbate shrinking demand for classical removable SIM cards, likely resulting in market stagnation, where limited/reducing demand in the consumer market is somewhat counterbalanced by increased demand in Machine-to-Machine (M2M) applications.

Despite the expected increase in the use of eSIM, ABI Research does not believe that removable SIMs will disappear completely from the market any time soon. Although the removable market will not ever return to pre-COVID-19 levels, eSIM readiness in other regions is not as mature as the US which will create a continued need, at least in the short to mid-term (three to five years) for classical removeable SIM cards.