I can't believe this was never discussed at the Apple iPad event.

The most interesting (and potentially disruptive) new iPad feature wasn’t even mentioned at the recent Apple iPad event. Instead, the “Apple SIM” was quietly mentioned on the Apple website afterwards. In the near future, the Apple SIM could make the unassuming SIM Card as relevant today as the 8-track, the typewriter, or the buggy whip.

According to their website, the new Apple SIM lets users choose “from a variety of short-term plans from select carriers…so whenever you need it, you can choose the plan that works best for you – with no long term commitments.” Currently this is being offered by Apple in the US (AT&T, Sprint, T-Mobile) and UK (EE) only, but a footnote on the website implies more will be added.

Although the Apple SIM is still a physical card, it is programmable via the options menu on the device, allowing consumers to select and switch between carriers to find the best deal.

No longer will you have to purchase separate SIM cards when travelling abroad and fumble to insert it in your device. You can now switch networks to a local carrier for the duration of your trip and avoid expensive roaming charges…at least in the US and UK right now…with more to surely follow.

Although this applies to data-only and does not include voice, it is a sea change in the evolution of the SIM card with implications for the consumers and wireless providers. An Apple SIM card presumably contains “locked” data. This allows Apple to manage subscriber carrier authentications and network selections. The subscriber makes the cellular network selections, which is all managed and controlled by Apple. Couple this with the vast “inventory” of consumer accounts and credit cards, and you potentials have a new consumer marketplace.

Apple’s secret war with the SIM Card

With a history of never accepting the status quo of any outdated technology it has no control over, Apple has for years been quietly waging a war against the SIM card, mainly because the physical size of the SIM card hindered Apple’s efforts for make thin devices. Some of you may recall the first SIM cards (1FF) , the size of a credit card, where deep inside the cell phones of the time. Then in 2007, the original iPhone used a much smaller 2FF SIM card and put it on that tiny tray accessible via a paperclip (I remember saying “huh?”)

In 2010, Apple disputed the entrenched “SIM ecosystem” by using the micro SIM (3FF) in the original iPad, and later the iPhone 5, which frustrated many users; Sharing data between devices back then was sometimes problematic. Eventually, carriers began offering micro-SIMs also.

Then in 2012, reminiscent of the “Beta versus VHS” wars, Apple pushed through its own version once again. Before the standards for the 4FF nano-SIM were finalized by ETSI, Apple ignored Motorola, Nokia, RIM and others launching its own version in the iPhone 5. Apple offered to license patents royalty-free to all competitors on condition they reciprocate and only if Apple’s nano-SIM design was fully accepted. Guess who won.

Remote programmable SIM Cards

Back in 2010, Apple partnered with Gemalto, a SIM card manufacturer, and worked to create a new SIM which would allow the device to be programmed and activated remotely, post-purchase, with carrier data. It was rumored Apple was also interested in developing a virtual voice and data SIM card but backed down under resistance from the carriers who understandably saw this as a threat.

Later 2010, the GSMA reversed its rules preventing such capabilities, stating:

“The GSMA today announced…the development of an embedded SIM that can be remotely activated. The move is expected to enable the design of exciting new form factors for mobile communications. It will also speed the development of M2M services by making it easier to bring mobile broadband to non-traditional devices such as cameras, MP3 players, navigation devices and e-Readers, as well as smart meters.”

With the tidal wave of non-traditional wireless devices on the horizon, this transformed a manual physical activation process into a remote automated one. Of course, only the carriers are supposed to control the remote activations or push updates to the SIM card.

This introduction of embedded SIMs has, for now, been all about serving the Machine-to-Machine (M2M) marketplace. Embedded SIMs enable scalable global deployments of M2M devices, such as vehicle fleets, remote sensors and meters, and consumer electronic goods via remote carrier provisioning. The carriers grudgingly supported this in order to not lose this market and secure this revenue.

To date, the carriers have only supported embedded SIMs for data-only applications. A voice and data SIM is much more complex than a data-only SIM. For voice, carriers are also hesitant to share the control and profits just yet. Some hackers, however, have accomplished this and programmable SIM cards are available on the market, such as from Symocom, but require technical experience.

Is the “iData” marketplace around the corner?

Apple has limited the Apple SIM launch to the new iPads and data only, for good reason. It will allow Apple to create and grow a mobile “iData” marketplace without pushback from the major carriers. Carriers have not been very successful in getting tablet users onto data plans so they have nothing to lose here. Having AT&T, Sprint, T-Mobile and EE on board is a good start. IPad consumers will be able to pick and choose data plans, presumably with the carriers competing to get the business. The future may see many data carriers in many countries listed in the Cellular Data Account drop-down menu, all competing for your business.

As Apple transforms this market, similar to iTunes for music or Amazon for books, it can (will?) gain market power. Like getting into a bath of warm water, Apple is slowly lowering the carriers and consumers in inch by inch so no one says it is “too hot.” This is, at this time, pure conjecture but it will be very interesting to see how this evolves.

So why is Apple doing this? Why should the consumer care?

Apple likes to “think different” and in doing so has created, and become the leader in, many markets: computers, tablets, phones, music, etc. etc. etc.

The Apple SIM appears to be a beachhead in Apple’s ongoing SIM (SIM-less) strategy positioning Apple in the following areas:

• Virtual SIMs: Apple has long hated SIM cards and for years has been interested in “Virtual SIMs”. The Apple SIM is still a physical card in a little tray, but in a few years this may all disappear as Apple transforms the physical SIM card altogether into an internal chip controlled by menu options on the IOS screen. Holland recently changed its rules allowing network-agnostic voice SIM cards. As other countries allow this, Apple is positioned to act as the marketplace. If Apple is finally able to kill the physical SIM card, other device manufacturers will most likely follow.
• Apple SIM for Voice: A consumer, assuming Apple is able to expand Apple SIM to voice, would be able to select alternate voice carriers for cheap international calls or when travelling abroad…all via a menu selection in their Settings. If Apple is able to partner with most popular carriers and MVNOs, this could be a game changer.
• Apple as a Carrier or MVNO: Instead of acting only as a marketplace (iTunes or the App Store) Apple could use its buying power to purchase data and voice services from major carriers globally. Apple could then use the best carrier in terms of cost and quality for each consumer in real time, depending on how Apple set-up the authentication, if they obtained Apple IMSIs & crypo-keys, etc. For example, Apple may use Carrier A for me as the best carrier in terms of coverage-cost, and Carrier B for you. In addition, Apple could reassign my SIM to a local carrier when travelling internationally to avoid high roaming charges.
• Apple for M2M and IoT: Earlier this year, Apple announced it’s entry into the Internet of Things (IoT) by adding two new elements into the iOS SDK, HomeKit and HealthKit. These allow an iOS device (iPad or iPhone) to communicate and control IoT devices such as your home thermostat, lights, coffee maker, etc. The Apple SIM could allow Apple go up the IoT value chain to now offer those devices themselves, think iTherostat, iSmokeAlarm, etc. for the consumer M2M market and iSensor or iMeter for the business.

The next moves by Apple and the evolution of Apple SIM will be very interesting to watch.