****Latin American Internet Market is Booming
Newsbytes - August 21, 2000 17:19
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SAN JOSE, CALIFORNIA, U.S.A., 2000 AUG 21 (NB) -- By Michael Bartlett, Newsbytes. Fueled by several factors, including a marked increase in the adoption of Internet culture by Latin American society, the online business prospects in Central and South America are rosy, according to a new study.
The top six Internet markets in Latin America are Argentina, Brazil, Chile, Colombia, Mexico and Venezuela. Collectively, these countries generated $1.18 billion in revenue from online business in 1999. That figure is projected to grow to more than $17.4 billion by 2005, according to research from Frost & Sullivan, an international strategic market consulting and training company.
Overall, David Humphreys, an analyst for Frost & Sullivan, believes development will be rapid in the coming years.
"Internet growth has been restrained by a low adoption rate due to low education levels and a historical pattern that Latin America is slower to adopt new things than other areas of the world," Humphreys said. "However, the Internet is becoming ingrained. You'll see a revolution in the next four to five years. The Internet is access to free information, and that will alleviate barriers in Latin America."
One restraint on growth in Latin America is the lack of financial resources by millions of potential end users. In this market, most of the wealth is concentrated in a small percentage of the population. In Brazil, for example, 20 percent of the population earns 64 percent of the country's total income. The lower 20 percent earns just 2.5 percent, with a per capita income of $630.
In an effort to bring Internet access to poor and rural areas, the Latin American governments and the private sector are taking steps to make it more affordable.
"A good example of governmental assistance to the Internet can be seen in Colombia," Humphreys said. "Colombia has only a 3 percent penetration rate of PCs. In the last three to four months, the Colombian government has initiated a plan to expand the realm of the Internet. They are giving subsidies on both access and PCs for rural areas, as well as teaching the importance of the Internet in general."
Two large players in the Latin American market offer local content portals across the region. Yahoo [NASDAQ: YHOO] has a big presence in the market, with separate portals for each of the six largest countries, plus many more. Star Media [NASDAQ: STRM], which offers services similar to Yahoo, was the first pan-regional content company.
Humphreys said that while many local, country-specific portals exist, many have been snapped up by larger portals. PSI Net has purchased a dozen Internet service providers in Brazil and Argentina alone in 1999 and 2000.
Market consolidation has led to tremendous growth potential. "Brazil is one of the top three fastest-growing Internet markets in the world," Humphreys said. "Free ISPs appeared there for the first time in the first quarter of 2000, allowing access to the lower-middle income segment. This will spur enormous growth in the next four to five years."
Frost & Sullivan can be found on the Web at: frost.com .
Reported by Newsbytes.com, newsbytes.com
16:11 CST
(20000821/Press Contact: Ryan Joel Canales, Frost & Sullivan, 210-247-2401/WIRES ONLINE, BUSINESS/AOL/PHOTO)
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