In a recent piece, I explored the impact of Apple’s eSIM embedded into the new Apple Watch Series 3. While not all will agree, the inclusion of the hardware to do eSIM opens the door for Apple to have a deeper participation in the ability to have consumers constantly connected. The bold prediction went as far as suggesting, this could be the beginning of the end of telcos, in a world where Apple has huge buying power and a strong motivation to keep the loyal fan base always connected. The piece closed with the suggestion that an eSIM would be included in the next version of the iPhone.
But then Google upped the game, releasing its new Pixel 2 with eSIM.
If you reconsider the predictions made, this means the creation of a severe threat to the commercial viability of incumbent mobile network providers. Google just made it real, and urgent.
It’s no huge secret that Google has ambitions to connect everyone. Google’s goal of universal internet access has already included ambitious projects like high-altitude weather balloons and solar-powered drones that beam the internet down to people below.
Chasing universal internet access is a massive opportunity for a tech giant whose business value is based on predicting intent. With another billion users on the Google ecosystem through search, android, youtube and more, Google will dominate consumer intent, globally. Hence their motivation to throw billions of dollars at the task, and more importantly, explore dozens of options in parallel.
Deploying eSIMs across the globe puts Google in the driver’s seat to start experiments to deepen their involvement in shifting the core paradigm that excludes too many from the internet today, affordability.
Traditional mobile operators have been stuck in their commercial model since we first got GPRS, many struggling to see their steep decline in ‘share of the ecosystem.’ Yes, we’ve seen steps forward like 4G, cheaper plans, and value-added services, but they’ve failed to reconsider the value ecosystem they operate in. Enter Google and Apple.
Google and Apple already know, and publicly state, that they see higher value in connected consumers than the current cost of data connectivity. That means, for Apple and Google, they are already motivated to subsidize your data connection to have you constantly connected.
Add the existing pain points of connectivity, such as roaming, pricing, and lock-in contracts, and you have a primed market wanting change. They just need to see the difference is possible.
Google already has a loyal fan base using Pixel phones for Google Fi, their connectivity option. The launch of the eSIM Pixel 2 merely paves the way for that fan base to grow, fast. With Google Fi, Google manages your connectivity on your behalf. So whether its cellular networks or Wifi hotspots, Google keeps you connected, globally. You need never worry about a telco again.
In 2008 when Amazon announced the Kindle, they changed the ecosystem for books. They digitized the product and its distribution. It took just 33 months for this change in the market to send Borders, the global #1 bookseller, to the point of bankruptcy.
I’ve always said that a scalable availability of eSIM from Google or Apple would pull the rug from under the incumbent mobile operators. So with the Pixel 2, Google has started the clock on complete disruption of mobile operators.
The challenge: though death is not certain for the mobile operators, do they have the brains and motivation to shift gear fast enough? Or will they cling to their cash cow?
Scott Bales is a global leader in the cutting edge arena known as “The Digital Shift”, encompassing innovation, culture, design, technology and mobility. A thought leader through and through, Scott is re-arming corporates with innovation strategies to challenge existing modus operandi and progress towards digital transformation.
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Death for operators seems unlikely to me – all that cable and wireless capacity will be a vital part of the value chain for some time yet – but the drift from retail, consumer-oriented businesses to wholesale capacity-providers feels inexorable, and the rise of the eSIM feels like part of that.
Operators will continue to exist until subsumed by consolidation or acquisition, providing capacity to a variety of consumer or business-facing organisations – Google, Apple, a variety of MVNOs, enterprises and technical aggregators developing 5G/ IoT industrial propositions… Even where the relationship with the consumer persists, is it fanciful to say that what many consumers want is a kind of wholesale relationship which provides them with data and connectivity in bulk, and hold the fancy trimmings? Less Bloomingdales, more Costco?
Is this death? No, but it’s a very different sort of business – low margin, high volume, requiring far less sophistication in the back office. It’s a utility, where the most successful businesses will be those that can streamline their operations and minimize the cost of doing business, keeping their wholesale pricing attractive to consumer and business giants like Google.
That all said, it must be galling for many mobile operators, after years of complaint about the profits made by ‘OTT players’, to see those digital behemoths turning around and coming after their core business too.