We have talked and deep-dived on the potential of eSIM across different connected things (see here) from automotive to drones (see here), to IoT (see here) and smartphones. The move that the industry (not all operators though) was waiting for, when someone like Apple integrates eSIM in smartphones is finally arriving; though Google was the first major player to add in last year's Pixel series, but a very tiny scale.

Apple showed a first glimpse of it with iPads and then Apple Watch. The iPhone wasn't going to escape the grand plan Apple has for eSIM and the stronghold it looks to have over end-to-end customer experience and profit from it at every stage.

All the new fall range of iPhones, both Xs series and Xr have integrated eSIM (except China SKUs). Some thoughts below on this development:

• Great addition for flexibility for consumers to choose a roaming country carrier or even within the same country, making the landscape very competitive.
• iPhone eSIMs will be controlled by Apple and it can dictate which carrier to partner with, support and show relative plans in a companion first or third party app or via any offline QR code-based activation by iPhone users.
• So, Apple can be the gatekeeper now since it will have control over the eSIM. Thus, it will demand a revenue cut for the activations happening through its eSIM.
• I believe eventually, Apple will also show its own plans white-labeled by companies such as GigSky or Truphone.
• This is great news for likes of Gemalto, G&D and others to not only sell eSIM chips but also on-demand connectivity management platforms to OEMs like Apple.
• Apple is in a position to charge a premium for the "convenience and ease of activating a new plan" on roaming or so forth.
• Apple will market this well and get an additional revenue bump from its affluent base of iPhone customers.
• Many operators have been fearing the moment when a powerful global actor like Apple, Amazon, Google or Facebook takes control of the data plans as well.
• Many operators have been reluctant to offer DUAL SIM or eSIM which enables many virtual SIM profiles as they don't want to cede control of the SIM.
• However, striking partnerships with these giants and sharing some revenue and treating them as resellers is the right (perhaps only) strategy for operators, as these players have become too powerful to fight or lobby against.
• Considering operator-Apple dynamics, it is still not clear how this will work within the same country e.g. US or Japan, which are core iPhone markets and where traditionally SKUs are different for the different carriers based on the underlying 2G technology.
• Maybe with just one Intel modem, Apple will have the same SKU across all US carriers and will benefit from eSIM scale and ease for consumers to switch or maintain plans between local carriers.
• However, the operators in the US and Japan are among the strongest and richest; it was notable that Apple struck a relatively cautious tone in how it communicated its eSIM plans - perhaps aiming to mollify its carrier partners - many of whom were present at the iPhone launch. We will watch the developing relationship with interest.
• eSIM in iPhones may thus come at a cost -- it's just not going to be that open at least and the relationship will have been hard negotiated between Apple and participating carriers.
• Apple will make sure it gets compensated for every new plan activated on iPhone via eSIM which could make plans more expensive than buying physically from an MVNO such as Lycamobile unless Apple sparks a strong tussle between carriers to lower prices, so Apple and iPhone users are benefited more.
• One thing is sure, Apple will rake-in a good chunk of revenue from its eSIM move and effectively become a global scale MVNO.
• Those Apple revenues from Services which are nearing US$10 billion per quarter, will likely get a big boost by this eSIM move.
• Time will tell if affluent Apple users are okay to pay more via Apple eSIM service for the extra convenience. I think convenience will trump!!

Feedback welcome. Please feel free to reach out if you want to discuss on this topic further.