Apple-y Never After – Will Apple’s Next Move Leave Networks with Cold Feet?

Don’t worry I’ll be keeping the Apple puns to a minimum. 

Let’s dive right in and get to the core of this story.

eSIMs aren’t exactly a new thing, in fact, when Lenovo launched the recent Motorola Razr 5G it was eSIM only, but did anyone notice or care? Not particularly. Although, you could argue Motorola has a smaller fanbase than other devices. Especially compared to the cult following of Apple’s iPhone. 

When the iPhone 14 hit the shelves earlier this month it was hailed as an unmatched innovation. You guessed it, not another camera or an invisible headphone jack, but Apple has well and truly killed the SIM card tray, with their eSIM-only model. 

Don’t get me wrong- I too am a champion of the eSIM, its benefits speak for themselves especially when it comes to IoT. 

But it seems that, following this news, the relationship between Apple and Operators might be on the rocks. 

An Apple a day makes the People Pay

Operators are terrified. They’re worried they might lose the iPhone – and currently throw themselves at Apple’s feet for a chance to sell them. 

The homepage of any UK operator is a testament to this.

But there are other tight-lipped secrets behind these Apple-centric operators. In fact, Apple insists upon it under their terms of business. Many of these terms are shrouded in secrecy and bound up with countless NDAs, so although we may not know the terms of these agreements, there are plenty of educated guesses out there. 

The Mayhem’s in the Margin

Ofcom reckons the average mobile phone bill is £14 a month. The UK population is around 67 million and there is an average of 1.2 subscriptions per person. This equates to £13.5bn revenue coming into the mobile industry in the UK alone.

Mobile networks once were enormously profitable, but in the last couple of decades, they’ve been faced with phenomenally tight margins. 

During this time, Apple has become a $1 trillion company with margins that no other business can rival. 

With the introduction of this eSIM model, Apple could potentially see its profits skyrocket even further – But at what cost to Networks? 

The mobile industry is built on standards. One of these standards is IR21 which allows devices to know what features a particular mobile network has. IR21 applies from 2G to 5G to any mobile operating system and IoT device. 

Except for, you guessed it…

Apple. 

For an iPhone to recognise your network supports 5G (or whatever) it needs an Operator Profile.

A Fight for a Spot 

The eSIM-only iPhone 14 will allow Apple to disintermediate the operator in a way that the traditional SIM has prevented.

Physical SIMs provide the user with a choice and give operators a direct relationship with their consumers.

In Apple’s eSIM-only world, consumers will buy their eSIM from the Apple app store. Apple will expect operators to compete for a position in the store and Apple will take a revenue share on the sale of the SIM as well as a share of the call revenue. 

Consumers will be encouraged to churn and hop from operator to operator, perhaps even on a call-by-call basis as a way of having better coverage.

Again this is not an Apple-originated innovation. Google does it in the USA and it works very well providing much better coverage than a single operator can. The difference is that Google does it without ‘bullying’ tactics.

Connectivity is at the heart of the mobile telecoms industry.

But is Apple about to turn connectivity into just another app that they can capitalise on?  Will this now give Apple the power to make or break an operator? 

The Apple eSIM will become how Apple can switch iPhone owners to its favoured operator, presumably whoever can bid the highest.

What do you think?

eSIMs can open the doors of growth for many businesses and networks but how do you feel about Apple’s approach here? 

A smart business move? 

Or a rotten idea?