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Will device vendors eat a piece of the global connectivity pie?

Will device vendors eat a piece of the global connectivity pie?

“Virtually every OEM has considered embedding some sort of “global connectivity” into devices."

This week, Apple made headlines with its reported pursuit of a mobile virtual network operator (MVNO) strategy for the US and Europe.

Whether the vendor confirms this rumour or not, for Dario Talmesio, research analyst, Ovum, something is certain.

“Virtually every OEM has considered embedding some sort of “global connectivity” into devices,” Talmesio says.

So far Ovum has recorded such activity from the likes of Google, Apple, Microsoft, Huawei, Xiaomi, Lenovo, HP, and Dell among others.

“The idea of global embedded connectivity is not new: Amazon started offering this capability on its Kindle devices in 2007,” Talmesio adds.

“But embedded connectivity has since transitioned to laptops, tablets, and now smartphones, and in the future it will take its place in the Internet of Things (IoT).”

For Talmesio, device vendors want connectivity to be a global service delivered at local prices, but so far established mobile operators have been unable to create an affordable global connectivity proposition that is always accessible with the same simplicity of starting an app.

“Device vendors have engineered several ways around this, mostly relying on two elements: SIM card innovation and MVNO agreements,” Talmesio adds.

As part of SIM card innovation, device vendors have used multi-Identity SIM cards, reprogrammable SIM cards, and even “virtual” SIM cards to allocate a local identity in every market and avoid roaming costs.

“In order to access local prices, these device makers have used MVNO agreements, often complemented by more traditional roaming agreements,” Talmesio says.

“These OEM-led global connectivity services still address fairly niche cases, but activities are moving towards mass-market propositions and mass-market and premium brands.”

At present, Talmesio believes it is still uncertain to what extent OEMs will want to subsidise connectivity, either by monetising services that rely on free connectivity, directly monetising connectivity, or a combination of the two.

“What is certain is that OEMs want to make their devices more attractive to end users and ease the sales process.

"In that, connectivity is one center-piece that will be globalised but also disrupted,” Talmesio adds.

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