A small article appeared in Barron's this week that has long-term implications for the telecom market. Usually, I don't get too excited about most things, but this development could very well be a game changer and will likely change the balance of power away from telecom's. Telecoms are already suffering from the commoditization of their services. This could be bad from their perspective.
Apple’s new iphone that is coming out this fall is expected to have a new chip called the eSIM. The benefit of this chip is it is designed to be programmed remotely and integrated physically into the phone. That means iphone owners will have a significant barrier broken down that slows their ability to switch carriers. This means iphones that are no longer “locked”! Telecom providers, on the other hand, will lose another barrier that artificially slows down their customers from readily switching carriers.
Don’t you hate after you pay up for a new phone that you then get “nickeled and dimed” for other charges such as the SIM card? The last couple of phones I bought, I actually had to pay for the SIM Card versus being free.
Worst still is you have to go into the carrier store and pay for another component (SIM) that is sold at hundreds of times the value of the component. It probably only costs a small fraction of a penny to produce. Furthermore, it is a pain in the “you know what” to go to the physical location of the store. Aren’t we supposed to be in the age of technology that provides simplicity?
The advantage in design is that the iphone will not require the SIM tray and will therefore be a much smaller component of the iphone and it will be physically integrated with the device.
For those of you who are investors, one of the companies making this component is a private company called Dutch Gemalto, but there are supposed to be others making it as well. This could be an opportunity to research.
Since GE is no longer "bringing good things to life", it looks like Apple is filling the void!
Thank you Apple!
