By Aaron West, Senior Analyst, Consumer Electronics and Display Applications, Omdia
The latest Omdia data for smartphone active installed base for 3Q22 shows the stark decline of smartphones with single SIM card slots and the under-the-radar rise of eSIMs over the past few years.
The rise of dual-SIM
Five years ago, in September 2017, 75% of global smartphones had single slots while 25% had dual slots. In September 2022, however, only 15% of total smartphones have single slots. A whopping 83% have dual slots, while triple-slot smartphones comprise 2%, a tiny but growing percentage.
With the growth of dual-SIM smartphones, the viability and need for a separate phone for business needs diminish. It will also lead to an overall reduction in smartphone demand and smartphones in use as the average number of smartphones per capita decreases. This is good for the environment because the number of phones needed to be produced reduces. However, this also begs the question of why manufacturers are making dual-SIM phones if the inevitable outcome is reduced phone sales per capita.
eSIMs are everywhere
The reduced phone sales per capita is exacerbated by the boom in eSIMs. The “e” in eSIM stands for “embedded”; it does not mean the SIM is electronic or virtual in any way. There is still a SIM in your phone, only that it is soldered with no way of removing it and is programmable.
One-third of smartphones currently in use already have an eSIM (on top of having a regular nano SIM slot). Globally, 97% of all phones now have a nano SIM slot, while the remainder comprises those with outdated micro and mini slots. However, in reality, this wealth of eSIM phones does not translate to eSIM-use, with the real penetration rate of eSIMs likely to be very small at 1%, if not less. This is because carriers across the globe currently still offer physical SIMs by default, which consumers may feel more accustomed to. Some carriers even require you to get a physical SIM first before you can request a switch to an equivalent eSIM. This is a process that most consumers do not realize; they also feel that it offers too few benefits to make the hassle worthwhile. It is also common for a carrier to mail your eSIM code or ask you to come into a store to set it up.
No need for a second phone anymore
Despite the above, the smartphone market is primed and ready to make the switch to eSIMs very quickly, just as soon as carriers start introducing consumers to eSIMs. This would also allow businesses to offer eSIMs easily to remote workers and allow business travelers to switch to a travel eSIM easily to avoid data roaming charges. Some phones are now even being shipped with no SIM slots, leaving consumers with no option but to switch to eSIMs. This is the case for the latest iPhone 14s, exclusively in the US. iPhones shipped globally will retain a dual-SIM slot, although it shows that Apple’s long-term ambition could be to phase out the SIM slot, freeing up internal space the same way it did with eliminating the headphone jack. If this trial run from Apple is successful, it is likely to remove SIM slots from the iPhone 15s in the EU at least. This will no doubt force local carriers to switch to pushing eSIMs by default and only offer physical SIMs by request.
eSIMs are not anything new
Smartphone OEMs have been quietly adding eSIMs to their phones for a few years now to little-to-no fanfare from the media. Google was one of the first, adding eSIMs to its Pixel phones since the third generation in 2018. iPhones have had eSIMs since around 2019 with the launch of the iPhone XR and iPhone 11. iPhone 13s and 14s have dual-eSIMs. There are just a few exceptions, such as all iPhones from mainland China and most iPhone devices from Hong Kong and Macao not having eSIM capability.
Samsung added eSIMs in 2020 to its Galaxy Note and S phones from Note 20 and S20, including the Fold and Flip. Other brands followed suit, including all of Huawei’s P40 range; the Oppo Find X3 Pro, X5 and X5 Pro, Reno 5A and 6 Pro 5G, and A55s 5G; the Xiaomi 12T Pro; and the Honor Magic 4 Pro.
eSIMs will become the “new normal”
The rise of eSIMs is inevitable as OEMs push for it even against the wishes of service carriers. Depending on who you ask, there are different pros and cons. They make it easier to switch networks, promoting competition, which is good for consumers but bad for carriers. They use up less space, which could mean bigger phone batteries, which is good for smartphone OEMs. They cannot be removed from the phone, preventing phone thieves from hiding their location, which is good for consumers. The flip side of this is that it could make switching between devices more difficult, especially if the old device is not responsive (such as if you drop it in the toilet or smash the screen).
This push from smartphone OEMs will eventually force service carriers’ hands to start using eSIMs, setting the stage for not just a boom in eSIM usage among consumers but possibly the further decline and obsolescence of the second phone.
