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Embedded SIM: Opportunities and Challenges for M2M Market

Explore the potential threats and opportunities of embedded SIM for MNOs and industry actors in the machine-to-machine (M2M) market. Analyze current SIM service generation, trends, and uncertainties in the market.

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Embedded SIM: Opportunities and Challenges for M2M Market

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  1. S-38.3046 Value Network Design for Internet Embedded SIM – Scenario Planning 12th March, 2014 Group eSIM Qin Jin Munira Shahnaz Erik Kosonen Risto Sivonen

  2. Machine-to-machine communications and SIM • Machine-to-machine is a potential driver towards embedded SIM (e.g., eCall) (Case firm, 2014; GSMG. 2012) • Problems with current SIM (Case firm, 2014; GSMG, 2012) • Change of operator costly to customer (lock-in) • Inaccessibility of M2M modems and SIMs in devices • Difficulty and cost, when location of device changes (roaming cost or SIM change) • Consumed space in terminals (cost, complexity of design) • SIM logistics (cost, inflexibility) (Modified from: www.ec.europa.eu/ecall) Current presenter: Qin Jin Embedded SIM

  3. Mobile network operator business perspective on M2M and embedded SIM Big questions • Will embedded SIM be a threat to MNOs on the M2M market? • Will there be new opportunities for industry actors and entrants? • Potential for new business models? • Case firm and market • European mobile network operator (MNO) • Machine-to-machine (M2M) market • Scope • M2M mobile network traffic with embedded SIM • Time frame • 5-10 years; until embedded SIM dominant Current presenter: Qin Jin

  4. Major stakeholders:Current SIM Service generation currently: (Case firm, 2014; GSMA, 2013a, 2013b) Current presenter: Qin Jin Embedded SIM

  5. Current SIM vs.Embedded SIM (Case firm, 2014; GSMA, 2013a, 2013b) Current presenter: Qin Jin Embedded SIM

  6. Basic trends • Mobile M2M traffic will increase, as also Internet of things traffic (all connected devices) and all wireless traffic (Case firm, 2014; Casey, et al., 2014; Gartner, 2013b) • M2M is connected with increasingly large systems of connected devices and Big Data (Case firm, 2014; Telematics. 2014) • Increased number of M2M terminal vendors (industry growth) (Case firm, 2014; Gartner, 2013b) • Increased variety of M2M terminals and amount of use cases (market growth) (Case firm, 2014; Gartner, 2013b; Telematics, 2014) • Increased mobility of M2M devices (Case firm, 2014; Telematics, 2014) • M2M platform vendors grow larger and onto the side of operators and network equipment providers (Case firm, 2014; Telefónica. 2013) • Growth of global M2M operator and platform driven alliances (competition of ecosystems) (Case firm, 2014; Gartner, 2012; Gartner, 2013a; Telefónica. 2013) • Growth of ICT maintenance costs (OPEX) faster than hardware costs (CAPEX) (Manner, 2013) Current presenter: Munira Shahnaz Embedded SIM

  7. Key uncertainties • Ability and will of global terminal vendors to become virtual operators (Case firm, 2014) • Alliances with M2M platform vendors may get large footprint compared to MNOs (Case firm, 2014) • New technology innovations may disrupt foreseen business models (Case firm, 2014) • No agreement on operator swap, roaming, mobile number portability, and subscription management (Case firm, 2014; GSMG, 2012) • Difference in authentication methods of coexisting mobile networks (e.g., 5G, Whatsapp, Skype) (Case firm, 2014; Gartner, 2013a) • Growth of M2M in mobile networks vs. in other wireless networks (e.g., Zigbee, Wi-Fi) (Case firm, 2014; Gartner, 2013a) Current presenter: Munira Shahnaz Embedded SIM

  8. Initial scenario themes:Two largest uncertainties Terminal vendor development towards MNO business • Large global actors (e.g., Apple or Google) have capability to change the ways the industry works: New business models (Case firm, 2014) • Car industry drives M2M (e.g., eCall in Europe) and embedded SIM; may attract car manufacturers towards virtual operator role (Case firm, 2014; Telematics, 2014) Growth of alliances with M2M platform vendors • Large alliances utilize global platform technologies, the owners of which may gain role as M2M operators (Case firm, 2014; example in Telefónica. 2013) • Simultaneously large operators and operator driven alliances grow (Case firm, 2014) Potential change in horizontal vs. vertical industry structure (cf., horizontal vs. vertical in case of indoor wireless access in Casey et al., 2014) Current presenter: Munira Shahnaz Embedded SIM

  9. Operator role Current presenter: Risto Sivonen Embedded SIM

  10. Operator role Current presenter: Risto Sivonen Embedded SIM

  11. Next tasks:Evolving toward decision scenarios Scenario analysis mostly on material from case firm • Triangulation with outside sources on industry/ market development perhaps useful • Deeper analysis may bring new interesting perspectives to scenarios and other methods for initial scenarios can be tested Confusion on market roles gives a thrilling starting point for value configuration analysis • Value network configuration probably will clarify trends and uncertainties • May bring further change to scenario analysis Current presenter: Risto Sivonen Embedded SIM

  12. Conclusions Embedded SIM includes a promise of greater flexibility New opportunities to various M2M businesses • In current and new roles • Potential for new business models Operators see especially large terminal vendors and global alliances with M2M platforms as threats • Diminished M2M business towards serving an ever decreasing amount of business customers or towards becoming the Bit Pipe Scenarios based mainly on material from case firm • Deeper analysis, triangulation, other initial scenario setups, and/ or value network configuration needed for improving them Current presenter: Risto Sivonen Embedded SIM

  13. References CASE FIRM (2014) Interview and material provided by case firm during and after the interview. CASEY, T., SMURA, T. & SORRI, A. (2014) Value Network Design for Internet. Scenarios in Wireless Local Area. Presentation on case study. Presentation at Aalto University, Spring 2014. GARTNER (2011) The M2M Market Evolution: Growth Attracts Everyone. Wallin, Leif-Olof and Jones, Nick (analysts). Published 1 June, 2011. GARTNER (2013a) Hype Cycle for the Internet of Things, 2013. LeHong, Lung (analyst). Published 31 July, 2013. GARTNER (2013b) Hype Cycle for the Telecommunications Industry, 2013. Diamond, Neil (analyst). Published 31 July, 2013. GSMA (2013a) Embedded SIM Remote Provisioning Architecture, Version 1.1., 17 December 2013. GSM Association, Official Document 12FAST.13. GSMA (2013b) Remote Provisioning Architecture for Embedded UICC: Technical Specification. Version 1.0., 17 December 2013. GSM Association, Official Document 12FAST.15. GSMG (2012a) Reprogrammable SIMs: Technology, Evolution and Implications. Final paper. 25 September 2012. Available online, http://stakeholders.ofcom.org.uk/binaries/research/telecoms-research/reprogrammable-sims.pdf <http://stakeholders.ofcom.org.uk/binaries/research/telecoms-research/reprogrammable-sims.pdf>. Referred on 9th March, 2014. MANNER, J. (2013) Lecture at Aalto University Telecommunications Forum, Autumn 2013. TELEFÓNICA DIGITAL (2013) Telefónica - M2M Global Operator – Strategy of Alliances. Presentation, June 2013. Available online, https://m2m.telefonica.com/m2m-media/m2m-downloads/detail/doc_download/522-telefonica-m2m-global-operator-strategy-of-alliances-by-enrique-menduina. Referred on 9th March, 2014. TELEMATICS (2014) Future mobility solutions: What role for the carmaker?. 14th Annual Focused Conference & Exhibition: Telematics Detroit 2014. June 4-5, The Suburban Collection Showplace, Novi, MI, USA. Embedded SIM

  14. Additional material Embedded SIM

  15. Time frame and business growth Differences in business and development cycles (Case firm, 2014) • Operator service development cycle: 6 months • Terminal product development: From about a year to few years • Telecom standard development time. Some years • Terminal life cycle: Decades M2M is growing rapidly • At stage of productivity type of competition within 5-10 years (Gartner, 2013a) World M2M (all connected things included) grows (Case firm, 2014) • About 15% annually measured by revenue (Whole world) • About 30% annually measured by revenue (Scandinavia) Embedded SIM

  16. Types and examples of connected devices Short-range wireless (e.g., WiFi, ZigBee, Bluetooth) Wired (e.g., Ethernet, PLC, Fiber, Cat5, Coax) Mobile networks (cellular) (Modified from Gartner, 2012) Embedded SIM

  17. Original list of major stakeholdersfrom case firm (Case firm, 2014) Network equipment manufacturers, leaders of network ecosystems, and network alliances (Ericsson, Jasper) SIM vendors Terminal vendors (Utility meters, security camera, telematics; later, e.g., car manufacturers) Platform vendors Operators, virtual operators M2M device users (electricity/ security companies, etc.) Standards organizations (ETSI, GSMA .. 3GPP) Legislator, regulators (political) Embedded SIM

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