Brazil Blazes Path for Latin American Markets

Brazil has surpassed Japan as the world’s no. 3 PC market.

The advent of an affluent middle class in Brazil amid a long run of economic stability has helped spur unprecedented expansion of the Latin American county’s emerging PC market.

Fast Shop Sao Paulo Brazil

Sao Paulo-based Fast Shop is one of Brazil’s largest high-end electronics retailers.

Low unemployment and accessible credit in the Latin American nation have stimulated robust consumer spending. Those factors, combined with government efforts to boost digital inclusion by encouraging lower PC prices and local manufacturing and have pushed Brazil ahead of Japan as the world’s third-largest PC market.

Back in 2008 consulting firm IDC ranked Brazil No. 5, just behind the United Kingdom. Not long before then a computer was considered an oddity to the general populace, according to Latin America’s largest manufacturer of notebooks, desktops and netbooks. That’s a long way from the IDC study issued last month that slotted Brazil behind only China and the United States for computer sales.

“When we entered the local market back in 2004, the computer was not yet part of everyday life for most of the population,” said Hélio Rotenberg, president of Positivo Informática noting that the Curitiba-based company has shipped more than 9 million systems since entering the Brazilian market, 1.9 million in 2010 alone.

The 3.86 million PCs sold in Brazil between April and June represents a 12.5 percent increase from the same period last year.

“Never before [were] so many computers sold in a single quarter in Brazil,” said IDC Brazil’s market analyst Martim Juacida.

A decade of economic stability at a time when much of the world was experiencing anything but, along with an unemployment rate of about 6 percent, are key factors in Brazil becoming the third-largest PC market, according to Maximiliano Salvadori Martinhão, telecommunications secretary of the nation’s Ministry of Communication.

“Brazil has experienced in the last 10 years a very stable and positive economic performance,” he said.

The Brazilian government sees PCs as an important tool for digital inclusion. The Ministry of Communications was concerned over low PC density among lower income classes and became part of the solution. In order to change the bleak picture the government stimulated local manufacturing by lowering taxes on PCs built in the country and sold under a set price cap. Simultaneously, several social programs and a good overall economic performance increased income for a large number of citizens.

“All these policies combined produced the important expansion in the Brazilian PC market,” Martinhão said.

Falling PC Prices in Brazil

Falling prices have contributed to Brazil’s rise on the list of global PC markets.

The positive figures are partly attributed to the country’s good economic performance and the higher access to credit that has made computers less out of reach for many Brazilians, according to Juacida, who also pointed to strong demand generated by manufacturers managing to maintain falling prices.

Martinhão agrees, stating that because the country was able to improve wealth distribution, the evolution of PC market was a positive consequence. As proof, second-quarter equipment sales in Brazil hit record levels, outpacing Japan by 95,000 computers and helping the country catapult to its current ranking.

“It is, in fact, a major achievement to surpass Japan,” he said, boasting as well over the fact that his country ranks higher than India and Indonesia, two countries with greater populations than Brazil.

The growth is not limited to the PC market: Brazil is the fourth-largest market for automobiles, recently surpassing Germany. It’s also the fourth-biggest market for TVs and LCD panels. In terms of the global mobile market, the country of about 200 million people has risen to No. 5, and there are now more registered mobile phones in Brazil than there are Brazilians. By 2015, South America’s most populous country will rank sixth among the world’s largest software developers if an Evans Data Corporation study proves accurate.

The ascendance of Brazil’s PC market is not an isolated phenomenon, according to Fernando Martins, Intel Brazil’s president and general manager. “Brazil’s economy is growing with strong fundamentals due to the emergence of a new affluent middle class,” said the 15-year Intel official. “This first wave of economic growth has generated 160 million new, eager consumers. Brazilians are affluent spenders — not savers — and highly selective in their purchases.”

Rotenberg echoed Martins’ view, remarking that the reason Brazil’s middle class is the PC industry’s current “engine of growth” stems from a combination of favorable factors.

Positivo Informatica marketing

Strong marketing helped Brazil-based manufacturer Positivo Informática ship 1.9 million PCs in 2010.

“Improvement of employment and income, the expansion of loans to individuals and reduction on the prices of computers — these factors, combined with low penetration of PCs in households paved the way for the rapid growth of the segment,” Rotenberg said, adding that the middle class will likely account for half of Brazil’s total PC market in 2011.

For the middle class, an affordable PC also comes with a bonus: prestige for the connected consumer.

Brazilians are very social in nature, according to the Sao Paulo-based Martins. Having an account with Facebook or orkut, Google’s social website operated in Brazil, is a status symbol, he noted, and to be able to share pictures and videos of family and friends “is a must.”

“In Brazil, Internet and PCs are synonymous — tablets and smartphones are still prohibitively expensive,” said Martins. “This confluence of factors explains why PC ownership is the No. 1 consumption dream today. Our market research shows that PCs are sexy in Brazil.”

Some market segments have more sex appeal than others. According to IDC Brazil, 51.5 percent of the computers sold in Brazil from April to June were laptops, while 48.5 percent were desktop computers. Home users were the main buyers of computers in the period, accounting for 69.5 percent of equipment sold. Companies, in turn, had 25.8 percent, while 4.7 percent came from government and education.

Reports from IDC, the government and other industry leaders don’t see Brazil’s love affair with the PC waning anytime soon. Intel’s Brazilian chief paints an especially rosy picture, predicting volume of Intel’s business in the country to triple by 2015.

“In my role,” Martins said, “I have frequent contact with all sectors of the Brazilian society, from ministers and secretaries of state in the nation’s capital to chief economists in major banks to bus and cab drivers on the streets. There is a common thread in these exchanges: Brazilians are extremely optimist about the country’s future.”

Optimistic and realistic, apparently. Even though Brazil makes up nearly half of South America’s entire population, Brazilian government and industry leaders don’t see their country surpassing either China or the United States on the list of world’s largest PC markets.

“The China and United States markets are significantly larger than Brazil’s, so it is not feasible to imagine that the country will reach the rank of second-largest market for PCs,” Rotenberg said. “The difference between those two markets and Brazil’s is approximately four times. But certainly, we will work hard to help Brazil grow.”

The telecom secretary agrees, stating that of far greater importance is his government creating conditions for its people and businesses to have access to a modern and affordable ICT infrastructure.

“The real goals to be achieved,” Martinhão said, “is a growing share of the population getting access to the information society, with its effects on education, income, etcetera, as a tool for economic and social development and reduction of poverty.”

Brazil Blazes Path for Latin American Markets

Brazil has surpassed Japan as the world’s no. 3 PC market.

The advent of an affluent middle class in Brazil amid a long run of economic stability has helped spur unprecedented expansion of the Latin American county’s emerging PC market.

Fast Shop Sao Paulo Brazil

Sao Paulo-based Fast Shop is one of Brazil’s largest high-end electronics retailers.

Low unemployment and accessible credit in the Latin American nation have stimulated robust consumer spending. Those factors, combined with government efforts to boost digital inclusion by encouraging lower PC prices and local manufacturing and have pushed Brazil ahead of Japan as the world’s third-largest PC market.

Back in 2008 consulting firm IDC ranked Brazil No. 5, just behind the United Kingdom. Not long before then a computer was considered an oddity to the general populace, according to Latin America’s largest manufacturer of notebooks, desktops and netbooks. That’s a long way from the IDC study issued last month that slotted Brazil behind only China and the United States for computer sales.

“When we entered the local market back in 2004, the computer was not yet part of everyday life for most of the population,” said Hélio Rotenberg, president of Positivo Informática noting that the Curitiba-based company has shipped more than 9 million systems since entering the Brazilian market, 1.9 million in 2010 alone.

The 3.86 million PCs sold in Brazil between April and June represents a 12.5 percent increase from the same period last year.

“Never before [were] so many computers sold in a single quarter in Brazil,” said IDC Brazil’s market analyst Martim Juacida.

A decade of economic stability at a time when much of the world was experiencing anything but, along with an unemployment rate of about 6 percent, are key factors in Brazil becoming the third-largest PC market, according to Maximiliano Salvadori Martinhão, telecommunications secretary of the nation’s Ministry of Communication.

“Brazil has experienced in the last 10 years a very stable and positive economic performance,” he said.

The Brazilian government sees PCs as an important tool for digital inclusion. The Ministry of Communications was concerned over low PC density among lower income classes and became part of the solution. In order to change the bleak picture the government stimulated local manufacturing by lowering taxes on PCs built in the country and sold under a set price cap. Simultaneously, several social programs and a good overall economic performance increased income for a large number of citizens.

“All these policies combined produced the important expansion in the Brazilian PC market,” Martinhão said.

Falling PC Prices in Brazil

Falling prices have contributed to Brazil’s rise on the list of global PC markets.

The positive figures are partly attributed to the country’s good economic performance and the higher access to credit that has made computers less out of reach for many Brazilians, according to Juacida, who also pointed to strong demand generated by manufacturers managing to maintain falling prices.

Martinhão agrees, stating that because the country was able to improve wealth distribution, the evolution of PC market was a positive consequence. As proof, second-quarter equipment sales in Brazil hit record levels, outpacing Japan by 95,000 computers and helping the country catapult to its current ranking.

“It is, in fact, a major achievement to surpass Japan,” he said, boasting as well over the fact that his country ranks higher than India and Indonesia, two countries with greater populations than Brazil.

The growth is not limited to the PC market: Brazil is the fourth-largest market for automobiles, recently surpassing Germany. It’s also the fourth-biggest market for TVs and LCD panels. In terms of the global mobile market, the country of about 200 million people has risen to No. 5, and there are now more registered mobile phones in Brazil than there are Brazilians. By 2015, South America’s most populous country will rank sixth among the world’s largest software developers if an Evans Data Corporation study proves accurate.

The ascendance of Brazil’s PC market is not an isolated phenomenon, according to Fernando Martins, Intel Brazil’s president and general manager. “Brazil’s economy is growing with strong fundamentals due to the emergence of a new affluent middle class,” said the 15-year Intel official. “This first wave of economic growth has generated 160 million new, eager consumers. Brazilians are affluent spenders — not savers — and highly selective in their purchases.”

Rotenberg echoed Martins’ view, remarking that the reason Brazil’s middle class is the PC industry’s current “engine of growth” stems from a combination of favorable factors.

Positivo Informatica marketing

Strong marketing helped Brazil-based manufacturer Positivo Informática ship 1.9 million PCs in 2010.

“Improvement of employment and income, the expansion of loans to individuals and reduction on the prices of computers — these factors, combined with low penetration of PCs in households paved the way for the rapid growth of the segment,” Rotenberg said, adding that the middle class will likely account for half of Brazil’s total PC market in 2011.

For the middle class, an affordable PC also comes with a bonus: prestige for the connected consumer.

Brazilians are very social in nature, according to the Sao Paulo-based Martins. Having an account with Facebook or orkut, Google’s social website operated in Brazil, is a status symbol, he noted, and to be able to share pictures and videos of family and friends “is a must.”

“In Brazil, Internet and PCs are synonymous — tablets and smartphones are still prohibitively expensive,” said Martins. “This confluence of factors explains why PC ownership is the No. 1 consumption dream today. Our market research shows that PCs are sexy in Brazil.”

Some market segments have more sex appeal than others. According to IDC Brazil, 51.5 percent of the computers sold in Brazil from April to June were laptops, while 48.5 percent were desktop computers. Home users were the main buyers of computers in the period, accounting for 69.5 percent of equipment sold. Companies, in turn, had 25.8 percent, while 4.7 percent came from government and education.

Reports from IDC, the government and other industry leaders don’t see Brazil’s love affair with the PC waning anytime soon. Intel’s Brazilian chief paints an especially rosy picture, predicting volume of Intel’s business in the country to triple by 2015.

“In my role,” Martins said, “I have frequent contact with all sectors of the Brazilian society, from ministers and secretaries of state in the nation’s capital to chief economists in major banks to bus and cab drivers on the streets. There is a common thread in these exchanges: Brazilians are extremely optimist about the country’s future.”

Optimistic and realistic, apparently. Even though Brazil makes up nearly half of South America’s entire population, Brazilian government and industry leaders don’t see their country surpassing either China or the United States on the list of world’s largest PC markets.

“The China and United States markets are significantly larger than Brazil’s, so it is not feasible to imagine that the country will reach the rank of second-largest market for PCs,” Rotenberg said. “The difference between those two markets and Brazil’s is approximately four times. But certainly, we will work hard to help Brazil grow.”

The telecom secretary agrees, stating that of far greater importance is his government creating conditions for its people and businesses to have access to a modern and affordable ICT infrastructure.

“The real goals to be achieved,” Martinhão said, “is a growing share of the population getting access to the information society, with its effects on education, income, etcetera, as a tool for economic and social development and reduction of poverty.”