Silicon and subscriber identification module (SIM) manufacturers are being forced to explore new revenue streams or find new ways to exploit the existing ones, says research firm Frost & Sullivan.
This is due to the decrease in cost and, subsequently, the profit derived from the SIM smart card market.
Silicon and smart card manufacturers are hoping that increased adoption of innovative technologies, such as near field communication (NFC), mobile TV and high-capacity SIM cards will increase their sales, the company says.
In its report, The World SIM Smart Card Market, Frost & Sullivan indicates the market earned revenue of $2.07 billion in 2006, and estimates that will reach $4.58 billion in 2012.
The influx of low-cost products from China has exacerbated the ongoing drop in prices, say Frost & Sullivan research analysts Anoop Ubhey, Alejandra Etcharran, Michelle Foong and Lindsey McDonald. Companies are turning to NFC and mega SIM cards, but they are still weary of the high costs involved in the migration.
The report reflects that mobile operators are also hesitant to switch to mega memory SIM cards, as it would require investment in an entirely new base of universal serial bus-enabled handsets that can support these new SIM cards. They will also need to educate end-users about the various applications content, it says.
Once the shift is made, silicon and smart card manufacturers should respond to mobile operators' demands and develop products and applications for these mega SIM cards, the report predicts.
"Because the cost of replacing a SIM card is usually 10 times the cost of the card itself, operators will have to rely on new subscriptions or upgrades of 2G to 3G handsets. The other option would be to issue lower-cost cards to 2G customers and high-end 3G cards only to new subscribers in order to sell a greater number of cards," remarks Etcharran.
Frost & Sullivan says high capacity SIM smart cards have no concrete cost structure and, as a result, early movers will have an advantage as they can generate decent revenue growth rates before the market attains 'mass market' status and prices stabilise.
Greater convergence of mobile phone applications is hiking the demand for more secure complex SIMs, giving rise to the likelihood of high capacity SIM cards and applications in the next couple of years, the report states.
Due to the increasing number of multimedia applications, mobile network operators are seeking SIM-based multimedia solutions to better serve their customers, and for this integration, the SIM requires greater memory, notes Ubhey.
He adds that applications such as address book, calendar backup, messaging, teleconferencing and file transfers, as well as entertainment through gaming and chat services, encourage the migration process for a sustained professional and personal convenience.
As card vendors have branched out into other areas of operations such as the Internet, this focus on solutions has gained importance, says the report.
The SIM smart card has integrated greater levels of support and security, with cellular networks evolving from voice to data. By demonstrating how subscriber loyalty depends on the innovations in the SIM card, market participants can persuade mobile operators to adopt advanced SIM technology, Frost and Sullivan concludes.
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