Even as smartphone sales slow in some markets around the world, global SIM card shipments will continue to rise through 2020, fueled by increases in the number of wearable devices that will be sold by electronics makers, according to a forecast from research firm IHS Technology.
SIM card shipments are expected to hit 5.6 billion in 2020, up from 5.4 billion in 2015, due to their use in many wearables, said the report, which was announced on April 13. More SIM cards will ship as smartwatches, health bands, smart glasses, smart clothes and other products increase their sales in the marketplace, presenting a growth area for smart-card suppliers and mobile network operators, according to the forecast.
"There is an interesting move toward wearable devices as companions to smartphones and other mobile devices, such as smartwatches, health bands, glasses and smart clothes, which present a growth area for smart-card suppliers and mobile network operators," Don Tait, senior analyst for IHS Technology, said in a statement. "The rising number of these devices in the market is an opportunity for operators and card suppliers to increase SIM penetration for both pluggable and embedded form factors."
Wearable devices that use SIM cards "have the potential to increase mobile network operator (MNO) subscribers, leading to more addressable devices for SIM management and increased revenue streams," the report continues. "Companion devices are expected to spur growth in the SIM card market from 2015 to 2020, according to the IHS Digital Security Intelligence Service."
Sales channels and products are expected to evolve and change from 2015 to 2020 as Apple, Samsung and other companies change their business dynamics and models, the report continued.
"The traditional SIM card market is not likely to implode any time soon, because there are still a lot of legacy solutions that need to be catered to; however, if and when manufacturers start changing their business models, we can expect a greater impact on the market," he said.
One change that is expected over the next few years is that embedded SIM cards (eSIMs) will likely make their way into more smartphones in the future, the report states. "In 2015, there were no eSIMs in smartphones with telecom functionality; however, eSIM will be driven by the Groupe Spéciale Mobile Association (GSMA)" in the near future. "These new smartphone models are more likely to include dual-mode SIM, which is a phone with an eSIM card and a removable SIM card. Cellular handsets will not rely solely on embedded SIMs because of latency issues that need to be backward compatible."
Throughout the marketplace, handsets are replaced much more often than SIM cards, which can typically be transferred to a new phone or device. "Should the market move toward an embedded model, the replacement rate of SIMs would trend toward that of handsets, reducing the SIM card market size," the report concludes. "However, during the initial introduction of eSIM cards in handsets, companies are more likely to follow a dual SIM strategy (i.e. having an eSIM and a removable SIM card in a smartphone)."
To safely approach the future of the market in the next few years, smartphone makers should include an eSIM and a removable SIM card in their upcoming devices so they can "test the market, similar to what was done with the advent of mobile payments," according to the report. "At the time, it was not clear if the SIM or the embedded secure element would be the solution of choice for mobile payments, so Samsung and other OEMs went all-in with a dual strategy and offered both" technologies.
"This strategy demonstrates the opportunities that arise with targeting the largest total available market possible and not to vex potential customers with a strategy that is too rigid," said Tait. "The SIM card industry will follow a dual SIM strategy."