News From Telecom World

SIM Card Market Defying the Downturn

Posted on: May 28, 2009

The latest data from IMS Research shows that the SIM card market continues to defy the economic downturn that is currently hitting the mobile market. Total shipments of SIM cards in 2008 grew to reach the record number of 3.07 billion. This is in marked contrast to the numbers from manufacturers which showed handset shipments declining sharply in the second half of the year.

Research Director, John Devlin, said, “The well publicised slump continues to affect the mobile sector in 2009. Subscriber growth has virtually come to a halt in many mature markets and is slowing in emerging markets. Similarly the handset market is struggling with manufacturers scaling back operations and restructuring in an effort to minimise costs. We only expect subscriber numbers to grow 6.9% this year, which is a long way down from the 18.6% recorded in 2008. In terms of handset volumes the outlook is even worse; IMS Research is forecasting the market to shrink by 7.8% to 1.09 billion in 2009.”

However, the latest figures from its new report shows SIM card volumes to rise by 419 million this year, pushing the market to a new high of 3.49 billion. So the question is why this is occurring? And what is driving this?

“Much of this is down to the simple fact that the cost of providing a SIM card is much lower than that of providing a handset,” added Devlin. “With this level of price differential a SIM-only proposition is a much more attractive option for both network operators and consumers. It saves the operator the cost of subsidising a handset to make it more affordable for end-users, whilst providing a way to continue to sign up new customers – and perhaps more importantly re-sign existing ones. At the same time these savings can be passed onto subscribers in the form of more competitive, lower cost contracts and pre-paid bundles.”

This is contributing to the increasingly competitive grey area between operators and handset manufacturers. Operators have traditionally relied on new handsets to support new services and attract customers. However, developments mean that consumers taking advantage of SIM-only offers need not miss out on new services if they retain existing handsets. Late last year Sagem Orga announced that it was partnering with BlueSky Positioning for A-GPS-enabled SIM cards to deliver services such as “buddy finder”, dating and nearest shop/restaurant/ATM. Similarly, earlier this year Oberthur Technologies launched a SIM card enabled with an accelerometer which will enhance applications and interactive services requiring motion sensing capabilities. Extending this trend, increasingly SIM cards will feature secure elements for mobile banking and NFC payments, and greater memory capacity and smart card web servers (SCWS) for enriched services and Internet usage.

“With everyone trying to define their unique selling point and gain an edge that justifies their long term competitiveness in this lucrative market, this will continue to be an interesting area of convergence and competition” concludes Devlin. “Whilst some of the mobile market has been hard hit by the economic downturn, it may just provide the catalyst for these new SIM-based developments to come to the fore.”

Source: cellular news

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