More info on Brazil
AOL Makes Aggressive Bid for Brazil Market
Updated 3:25 PM ET November 16, 1999
By Shasta Darlington
SAO PAULO (Reuters) - The
world's largest Internet service
company America Online Inc.
broke into Latin America Tuesday
when it launched its Brazil
operations, marking the start of a cyber-war for the region's
biggest market.
AOL, with regional partner Venezuela's Cisneros media group,
said it will conquer Latin American Internet users with aggressive
advertising, access to its 19-million-strong global client base,
advanced technology and local content.
"America Online will be an unrivaled full service company in
Brazil," Bob Pittman, president and chief operating officer of
AOL said at a launching event in Sao Paulo. He said AOL will
eventually be the No. 1 Internet service provider in Brazil.
With Internet use growing at over 80 percent a year, Latin
America has become the latest virtual frontier for online firms and
Brazil, the region's largest economy, is home to about half of the
cybersurfers and two-thirds of all electronic commerce.
AOL will direct the lion's share of a $200 million Latin America
investment toward Brazil in the hopes of toppling current Internet
access leaders Universo Online (UOL) and Zaz, bought up
earlier this year by Spain's Telefonica, directors said.
Though AOL declined to comment on the exact size of
investments for Brazil, rumors of a splashy launch party -- that
will feature Afro-Brazilian pop star Carlinhos Brown -- spurred
competitors to step up their own advertising campaigns.
The mammoth UOL, owned by Brazil's second and third-biggest
media groups Abril and Grupo Folha de Sao Paulo, has reigned
over the country with little competition until now.
But AOL is likely to grab spotlights this week as the Dulles,
Va.-based bombards Brazil with television, radio and billboard
ads and floods the market with Internet access programs on
computer discs tucked into newspapers and magazines and
distributed in shopping malls and schools.
AOL also plans to open stores in Brazil's financial center of Sao
Paulo and in Rio de Janeiro where browsers can see its Internet
service with orientation from computer experts.
"The secret is just getting people to try AOL -- they'll taste the
difference," said Francisco Loureiro, president of AOL's Brazil
operations. "We want to become the market leaders as quickly
as possible."
According to analysts, AOL expects to replace Zaz, Brazil's
second-largest Internet provider, within a year. Then it will take
on UOL, the world's largest non-English Web site.
AOL is betting its sophisticated services and the access it offers
to a huge global community at competitive prices will lure
individual users and advertisers. Still, it will be hard to compete
with UOL's strong local content that includes access to the
country's major magazines and newspapers.
AOL directors said the company expects most of its clients to be
newcomers to the Internet as the online community in Brazil
explodes to 5 million by 2002 from a current 2 million.
"Our focus will be the market to come," said Loureiro. "We
expect to gain a disproportional percentage of it...though some
of the market will also migrate to us."
In Brazil, AOL will use Netstream's IP-based network, recently
bought by AT&T . AOL also announced a deal with IBM Corp.
to offer financing to Brazilian clients.
AOL will be joining other international heavyweights that have
already staked claims in the giant Portuguese-speaking nation of
165 million, including Yahoo!, StarMedia and Microsoft .
But as the world's No. 1 online service, AOL will be coming
from a privileged position. AOL expects to boast 20 million
subscribers by the middle of next year with Internet use growing
in Europe, Asia and Latin America. The company plans to
expand to Argentina and Mexico by the middle of next year.
Brazil's UOL is the biggest Internet provider in all of Latin
America with only 500,000 subscribers.
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