By Wei Shi

Sweden’s mobile operator Tele2 announced it will collaborate with Microsoft to enable eSIM on Windows 10 based devices.

A Mobile Plans application will be preloaded on Windows 10 devices coming with embedded SIM, eSIM, chips, e.g. laptops or tablets. When activated, users can take their devices out of Wi-Fi or fixed internet environment and remain connected through Tele2’s mobile network.

eSIM, has been controversial when it comes to mobile operator acceptance. This is chiefly down to the fear that the operators feel they will lose control over and the direct relations with their customers as they do now with the physical SIM cards. By definition, eSIM users can switch operators remotely without visiting a retail shop. In this particular case though, because Tele2 is the first operator to offer eSIM service in Sweden, the concern for churn is mitigated, at least until its competitors follow suit.

This deal can bring multiple benefits. For Tele2, this opens a new revenue stream to mobile broadband, in addition to enhancing its reputation as an innovator. However, we believe the offer in its current form is more a symbolic move than substantial business opportunity.

To start with, consumer PC usage is declining, and not many models are being shipped with eSIM capability. (A quick search for eSIM enabled devices on the homepage of Sweden’s leading electronics store Elgiganten does not return many results.) When PCs are being used, they are mainly in indoor environment where more often than not there is already either a Wi-Fi or a fixed connection in place, and, ironically, where cellular coverage is normally inferior.

In outdoor uses cases, which predominantly are for tablets (and much larger number of smartphones), iOS and Android tablets outsell Windows based tablets (Microsoft’s Surface series and a few 2-1 models primarily made by Lenovo) by a big margin, making the addressable market for this deal very limited.

However this will be a useful test for Tele2 to gauge consumer use patterns, before it expands into the more mainstream iOS and Android segments. Maybe more importantly, it will also serve as a testbed of the technology for the more lucrative corporate market, where PCs are still widely used, without frustrating the corporate IT departments with immature products.

For Microsoft, this is a good (re-)entry point to the mobile market, after its ill-fated venture into smartphones through the partnership, then acquisition, of Nokia’s mobile device business.