October 22, 2014
THE END OF THE SIM CARD?
If you have been paying attention to the online tech news, there’s one story that everyone is talking about: how Apple just killed the SIM card. The news broke at the launch of their new iPad, the Air 2, which they announced would ship with an ‘Apple SIM’ pre-installed. This SIM can switch between providers, giving the user a choice of which service to use without them having to swap the SIM out each time. AT&T, T-Mobile and Sprint have all signed up in the USA, and more will follow around the world following the Air 2’s launch. It’s believed that this innovation will eventually lead to the SIM becoming obsolete. After all, if you no longer need a separate SIM card to pick up a signal from any given network, then you may as well take the microchip off the SIM card altogether and just make it part of the device.
People seem to be taking this possibility very seriously. Gemalto, one of the world’s largest SIM card manufacturers, saw their shares drop in price by a fifth since Apple’s demonstration last week. Here at Telestial, however, we’re not ready to pack up our things and go home just yet. This technology is not exactly new, after all. Our SIM cards offer a choice of provider and will switch automatically when you cross a border. It’s the result of years of hard work, including our own technical innovation and countless agreements with network providers. And this is where we think Apple may run into a few problems on their way to world SIM domination.
First of all, the people with the most to lose from this new innovation, namely the network operators that currently provide their own SIM cards, are also Apple’s biggest distributors. Very few people can afford to buy a brand new iPhone direct; they would much rather spread the cost over a period of months or years as part of a phone contract. It’s a model that has worked well for both parties so far, with customers getting access to the most modern smartphones for a relatively cheap upfront sum. If Apple do plan to get rid of SIM cards altogether, they may find themselves at war with the very people who have helped them get this far in the first place.
Apple have skirmished with providers already, and for the same reason. In 2011, they were fighting operators on several fronts, including how the App Store would be managed and whether they could remove SIMs altogether in order to make more space inside the handset for functionality. Back then, the networks all came together to gently suggest that doing away with SIM cards was not something they were particularly interested in. Even Apple’s compromise, a smaller SIM (known now as the microSIM) was very slow to be adopted. It was not until it was clear that the iPhones were a hit and in huge demand that networks relented and began to manufacture smaller SIMs. This success carried over into Apple’s next change, the nano-SIM, which was adopted by the network operators with very little fuss at all.
It is not just network operators that need to be wary. Customers should also be on their guard, and for one very simple reason: Apple have never done anything that could be described as ‘cheap’. Being expensive is a part of their brand attraction (and part of what has made it the most recognisable brand in the world). You know that when you buy an Apple product, it has been designed to the highest possible standards and the price reflects that. If Apple are looking to cut network operators out of the SIM equation, it seems very likely that they will step in to take their place in some way. How they plant to monetize this opportunity remains to be seen. They might levy a small fee each time a user switches operators. They could charge for access to certain networks in certain areas, or even add a fractional amount to each data session you start on their SIM card (the SIM is currently for data only, but this may also change). Whatever they decide to do, there is a huge difference in paying a premium for your device, and paying a premium every time you want to use it.
However this saga unfolds during the coming weeks and months, we at Telestial are confident that the humble SIM card isn’t going anywhere just yet.
