Brazil Telecom, Software and Media Market Report

1. Know the market basics

A. WHAT'S THE MARKET & NUMBERS

Computers

The computer hardware sector is one of the fastest growing
sectors in Brazil, with total revenues of $20 billion in 2002. This
value corresponds to a 3% decrease from the previous year, but the
general trend has been for Brazil?s spending to increase rapidly.

The great number of Brazilian imports of computer hardware
and peripherals reflects the fact that local production for such parts
is not keeping up with local market demand. Therefore, there are
excellent opportunities for US exporters of electronic hardware and
peripherals. Currently, the US supplies 57% of Brazilian imports of
such products.
Best prospects for US exports of computer hardware include
laptops, scanners, printers, DVDs, handheld devices, network
products, storage devices and quickcams.
Global players, including IBM, Compaq, ABC Bull, Hewlett-
Packard and Dell Computers locally manufacture most PCs sold in
Brazil. Other major manufacturers are Itautec, Microtec, UIS and
Tropcom. Companies manufacturing PCs locally receive fiscal benefits
through the ?Basic Productive Process? and through the
?Informatics Law? which assure more competitive prices to local
PC manufacturers.
Outlook: The computer hardware sector in Brazil is likely to
continue expanding as industry and commerce continue important
automation upgrades, and the number of home users continues to grow.

According to the Massachusetts Institute of Technology, Brazil
has become the world?s seventh biggest software market, with
sales of $7.7 billion in 2001, similar in size to the software markets
of the world?s most populous nations: China (sales of $7.9
billion) and India (US$8.2 billion). Software revenue in Brazil now
equals almost 1% of GDP.

The software packages that will continue to be in the highest
demand in Brazil are those for customer relationship management
Doing Business with Brazil2004 Business Review/Directory www.brazilcham.com 142
Tax (IPI), under the Provisory Measure 100/02.
The software packages that will continue to be in the highest
demand in Brazil are those for customer relationship management
(CRM), supply chain management (SCM), business intelligence
(BI), database management, electronic document management
(EDM) and enterprise resources planning (ERP).
Security software will be in high demand, despite the budget
constraints that companies continue to face in 2003. Security is the
number one solution sought by the financial and telecommunication
institutions, as well as the government sector.
Outlook: IT service providers will likely review service and
product portfolios, strategically repositioning their marketing
plans towards small contracts. Analysts expect that this will
enhance price competition among service providers.
 

Telecom

Brazil has the largest telecommunications sector in the region,
but in the last two years the sector has been affected by the global
downturn faced by the telecommunications industry. Net revenue
for telecommunications equipment and services in 2002 was
approximately $16.2 billion, a significant decrease as compared to
2001 ($26.2 billion). Services, including carriers, accounted for
$13.9 billion of net revenue, while product suppliers (hardware &
software) generated $ 2.3 billion.
In 2003, an average growth of 1% is predicted in the sector.
The Brazilian import market for telecommunications equipment
and components in 2002 surpassed $596 million and is expected
to increase in 2003. The US makes the lion?s share of Brazilian
imports with 58% of all telecommunications imports. Southeast
Asian countries (mostly South Korea and China) increased
exports to Brazil in 2002 by 22.4% and European countries
(mostly Norway, Germany and Sweden), with 13.2%, are
principal US competitors.
 

The privatization process has brought Brazil unprecedented
investments of over $27 billion. The injection of new investments
slowed to approximately $3.4 billion in 2002, mainly due to prior
large investments made by companies in the fixed and wireless
segments to comply with standards established by Anatel,
Brazil?s telecommunications body. Moreover, the turbulence of
the economy and uncertainty about the plans of the newly elected
president also contributed to the slower pace. However, for
2003/2004 the industry expects an injection of an additional $4.6
billion, mainly from carriers committed to introducing GSM services
in the country. By 2005 Anatel predicts that total investments
in the telecommunications sector in Brazil will reach $53
billion; 47% of this amount will be for fixed services and 19% for
mass communications services.
According to Anatel, in November 2002 Brazil had over 81
million telephones. Of this total, approximately 49 million were
fixed lines (39 million effectively in service), and 32.6 million
wireless. These figures demonstrate extraordinary growth compared
to the mere 13.3 million fixed lines existing in 1994.
Telephone density (the number of lines installed compared to
the country?s population) has also increased significantly. For
each group of 100 inhabitants, the number of telephone terminals
installed went from 8.6 in 1994 to 29.3 in December 2002.
Many multinational players established domestic manufacturing
plants to provide products and services to major new operators,
increasing jobs in the sector by over 40%.
Good opportunities for US companies will be found mostly
in the wireless market, as a significant increase of wireless
data applications is expected with the deployment of GSM
and CDMA 1xRTT technologies. Trends continue to be
toward convergence, i.e., adding telecommunications services,
to maximize the benefits derived from investments and
efficient operations.
In the evolution toward 2.5G and 3G, local cellular operators
are considering taking different routes in terms of standards. Most
operators who adopted the TDMA platform (approximately 80% in
Band B) are still studying or conducting tests to define what standard
to follow: GSM or WCDMA. Furthermore, to survive and
remain financially healthy, carriers will have to find new ways to
retain their existing customers, generate new revenues, and keep
operational and capital expenditures low.
Special attention should be devoted to small-to-medium enterprises
(SMEs) as they account for 98% of the registered companies
in Brazil and compose 48% of the country?s GDP. Most of these
companies still do not have good Internet connections and will
need customized services.
Best prospects: New Generation Networks (NGNs),
Corporate and Virtual Private Network Services (VPNs), new
revenue generating mobile services (preferably based on the
existing network), broadband multiple services (evolving from
plain old telephony services such as Integrated Services Digital
Network (ISDN), Circuit Data and Voice Over Internet Protocol
(VoIP), intelligent services network, new services merging
voice, data, image and sounds, telemedicine equipment, aecurity
telecom equipment (alarm receivers and transmitters), ELearning
Services (to fill the geographic and income gaps
between the populations at the lowest income levels and those
in the middle) and System Integration Services.
 

B. REFERENCE PRICES

Retail

Wholesale

Equipment

2002

2003

D. IMPORTANT PLAYERS

Beverage

Poultry & Meat

Snacks

Equipments

E. ASSOCIATIONS

Asociaci? Latinoamericana de la Industria El?trica y Electr?ica - ALAINEE

ASSOCIA?O BRASILEIRA DA INDUSTRIA DA RADIODIFUS? (ABIRD)

ASSOCIA?O BRASILEIRA DA INDUSTRIA DE COMPUTADORES E PERIFERICOS (ABICOMP)

ASSOCIA?O BRASILEIRA DA INDUSTRIA DE ILUMINA?O (ABILUX)

ASSOCIA?O BRASILEIRA DA INDUSTRIA DE MAQUINAS EQUIPAMENTOS GRAFICAS (ABIMEG)

ASSOCIA?O BRASILEIRA DA INDUSTRIA DE MATERIAL FOTOGRAFICO (ABIMF)

Associa?o Brasileira da Industria El?rica e Eletr?ica - ABINEE

ASSOCIA?O BRASILEIRA DA IND?TRIAS DE COMPONENTES PARA INFORM?ICA (ABICIN)

Associa?o Brasileira da Propiedade Intelectual

Associa?o Brasileira das Empresas de Engenharia de Telecomunica?es - ABECORTEL

ASSOCIA?O BRASILEIRA DAS EMPRESAS DE SERVI?S DE INFORM?ICA SAO PAULO

Associa?o Brasileira das Empresas de Software - ABES

CINEMATOGRAPHY/

F. TRADE SHOWS

Telexpo 2004
Stops: Sao Paulo, Brazil
Date: March /2004
Sector: Telecommunication
Certified Trade Show:  Organizer is in charge of the U.S. pavilion. The USCS will provide the services list for the companies, institutional booth at the show and briefing

Telexpo Wireless 2004
Stops: S? Paulo, Brazil
Date: 09/2004
Sector: Telecommunications

2. Test the market through Brazilian Newspapers

3. Reach relevant prospects from our CD-Rom Directory

4. Find reps / distributors through our mailing & telemarketing