Alongside the new iPad Air 2 and iPad Mini 3, Apple is offering its own SIM card to enable mobile broadband services.
Apple SIM has the following characteristics:
- Enables the user to choose from a range of different carriers and carrier data plans directly from the user interface of the iPad.
- Available initially with support for AT&T, T-Mobile US, Sprint and EE (UK).
- Is removable, for now, so users are able to use an existing carrier SIM in its place.
Our analysis –
Apple SIM threatens to fundamentally change the relationship between mobile operators and users. Making it easy for users to switch carriers and tariffs from a device user interface removes barriers to consumer switching, makes market competition more efficient, and places pressure on operator revenues and profitability.
The Apple SIM model moves Apple into a mediation position because for operators to be present on the Apple SIM, operators must negotiate terms direct with Apple, rather than offering their own carrier iPad SIM direct to any end user.
With this initial iPad launch, Apple is testing the business model and technology of multi-operator SIM cards. If successful, Apple has a number of ways it will look to extend the Apple SIM strategy:
Mobile operators' business models centre on the SIM card. It anchors the user into the carriers' billing system, acts as a source of identity, and is the security token which authenticates the user onto the mobile network.
Throughout the disruption caused by the arrival of technology companies into the mobile market with modern smartphone designs, the SIM has been the life raft operators have clung onto in order to maintain their business model and value chain position. But a multi-carrier "soft SIM" threatens this last vestige of the mobile operator market position.
Yet for now, the impact of Apple SIM is modest because it is only offered on the iPad and not the iPhone which is Apple's key product for mobile operators. Near term, Apple SIM offers benefits for consumers and for Apple:
Apple SIM is the biggest strategic challenge to mobile operators for years. Like FaceTime, Apple is starting small, but just like Apple's VoIP efforts this is just the initial small step in a longer term Apple strategy.
But all is not lost for telecom operators. Carriers still have a significant role in subsidizing expensive Apple hardware and marketing devices which will help in negotiations over Apple SIM tariffs.
The tide continues to shift away from traditional telecom players into a new broader mobile market. In this new mobile and telecoms world, technology companies are increasingly the most significant companies in the value chain, even in core telecom services such as voice and messaging and now with Apple SIM in access and mobile broadband connectivity too.