· ©2001 emarketer,inc.reproduction of information sourced as emarketer is prohibited without...

The

eLatinAmericaReportTM

January 2001

www.emarketer.com

©2001 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.

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The eLatin America Report


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3


Methodology: The eMarketer Difference 7

I Overview 9

II Economy and Infrastructure 13

A. Identifying Potential Internet Users 14

B. Telecommunications Infrastructure 18

C. Cable Television Infrastructure 25

D. PC Infrastructure 27

E. Internet Infrastructure 34

III Internet Users and eDemographics 37

A. Internet Users 38

B. Usage and Demographics 43

C. Wireless Users and Penetration 46

IV eCommerce 53

A.Total eCommerce 54

B. B2C eCommerce 58

C. B2B eCommerce 69

D. mCommerce 75

V eAdvertising 77

VI eFinance 83

A. eBanking 84

B. eInvesting 87

C. Wireless Financial Services 88

4 ©2001 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.


VII Country Reviews: Argentina 91

A. Overview 92

B. Internet Users and eDemographics 94

C. eCommerce 98

D. eAdvertising 109

E. eMobile 110

VIII Country Reviews: Brazil 111

A. Overview 112


C. eCommerce 121

D. eAdvertising 132

E. eMobile 133

IX Country Reviews: Mexico 139

A. Overview 140


C. eCommerce 147

D. eAdvertising 155

E. eMobile 156

X Country Reviews: Other Countries 159

A. Chile 160

B. Colombia 165

C. Venezuela 167

Index of Charts 169

5 ©2001 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.


January 2001

Welcome to eMarketer

Dear Reader:

eMarketer’s January 2001 eLatin America Report™ offers the most comprehensive and accuratepicture available of the internet in this important region of the globe.

Prepared by our eLatin America analyst Noah Elkin, along with the eMarketer research team, thisreport is a valuable reference tool for tracking the internet market in Latin America. It will providecritical data and insights to develop business and marketing plans, create presentations, answer vital,“need-to-know-now” questions and make informed decisions about online ventures.

Presenting statistical information from a wide range of authoritative research sources, the eLatinAmerica Report™ provides quick answers to hundreds of questions, such as:

■ How many people will be using the internet in Latin America?■ What are their preferred online activities?■ Which country has the highest internet penetration rate?■ How fast is e-commerce growing in Argentina? Brazil? Mexico?■ How many people subscribe to wireless services across the region and what is the future of the

mobile internet in Latin America?■ What are the major trends in the online advertising market?■ Who is using online banking in Latin America?

If you have any questions or comments concerning eMarketer or any of the material in this report,please call, fax or e-mail us.

Noah ElkineLatin America Analyst

Noah ElkineLatin America [email protected]

eMarketer, inc.821 BroadwayNew York, NY 10003T: 212.677.6300F: 212.777.1172

Reuse of information in this document, without prior authorization, isprohibited. If you would like to license this report for your organization,please contact David Iankelevich at [email protected], or212.677.6300 ext 213.

Written by Noah Elkin

Also contributing to this report:Marius Meland editorRobert Janes editorMustafa Sakarya researcherDana Hill production artist


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Methodology: The eMarketer Difference 7

I Overview

II Economy and Infrastructure

III Internet Users and eDemographics

IV eCommerce

V eAdvertising

VI eFinance

VII Country Reviews: Argentina

VIII Country Reviews: Brazil

IX Country Reviews: Mexico

X Country Reviews: Other Countries

Index of Charts


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8


Methodology:The eMarketer DifferenceeMarketer research is founded on a simple philosophy of aggregation:

The key to approaching quantitative truth – particularly whenexamining the internet marketplace – is to consider data from as manyreputable sources as possible. No one has all the answers. But takentogether, multiple sources, coupled with healthy doses of commonsense and business intelligence, create a reasonably accurate picture.

eMarketer has no testing technique to protect, no research bias, and noclients to please. The eMarketer research team begins each report byexamining research studies, surveys, and reports from hundreds ofpublished, publicly available sources; we then filter, organize, andsynthesize the information into tables and graphs. Finally, we present thecomparative source data along with our own analysis, estimates, andprojections. As a result, each set of findings reflects the collected wisdom ofnumerous research firms and industry analysts. The benefits to our readersare threefold:

■ Information is more objective and comprehensive than that providedby any other single research source

■ Information is available in one place – easy to find, evaluate, andcompare

■ Information can be quickly accessed to make intelligent, well-informedbusiness decisions

Methodology

Overview

Economy & Infrastructure

Users & eDemographics

eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

IMethodology: The eMarketer Difference

I Overview 9



IV eCommerce

V eAdvertising

VI eFinance





Index of Charts


9



10


Over the past year, the Latin American internet market, like the internetmarket worldwide, experienced dramatic rises and falls. In the first half ofthe year, investments in internet portals, Internet Service Providers (ISPs),e-commerce marketplaces and personal finance sites soared. Latin Americawitnessed a marked rise in the number of Spanish- and Portuguese-language web sites, spurred in part by the recent launch of heavilyfinanced portals such as StarMedia, Terra Networks, QuePasa.com, andSpanish and Portuguese versions of Yahoo!, AltaVista, Microsoft’sMSN.com and AOL, among others. Local content producers alsocontributed to this trend, with Argentina now the largest producer ofSpanish-language content on the internet. In sum, with internet usage inLatin America growing at one of the fastest rates in the world, visions ofmillions of e-commerce dollars danced before the eyes of internetproponents across the region and abroad.

Enthusiasm for the internet cooled around the world in the spring of2000, and Latin America was no exception. Venture capital marketscontracted and even the most glorified Latin American web sites wereforced to tighten their belts and re-examine strategies and revenueprojections.

Some skepticism is warranted, particularly where the short-term growthof the internet in Latin America is concerned. Considerable barriers torising internet usage remain, from widespread poverty and incomeinequality that make the internet unaffordable to all but a small percentageof the population to an antiquated and limited telecommunicationsinfrastructure to low PC ownership and penetration rates. Consequently,only about the top 15% of the population, which is largely restricted tomembers of the middle class and above, can be considered a “targetmarket” for internet services. Not surprisingly, most studies find that thevast majority of internet users are concentrated in the top-threesocioeconomic segments.

Much of the region’s telecommunications infrastructure is fragile andpoorly developed, and teledensity rates across Latin America tend to below. For example, there are only 20.11 telephones per 100 inhabitants inArgentina, 14.87 per 100 in Brazil and 11.22 per 100 in Mexico. Basictelephone costs are high, and remain one of the principal obstacles togrowth in internet usage across the region. However, thanks in large part toderegulation, investment in the telecommunications market is proceedingrapidly, promising better and cheaper service for home and business users.The wireless market is also expanding aggressively, with estimates puttingthe number of subscribers in 2004 as high as 189 million. However, in thenear term, the number of people accessing the internet from a wirelessdevice will be small. Rather, increased fixed-line teledensity is one of thekeys to growth in Latin America’s internet market.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


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Likewise, the percentage of the Latin American population with a PC ateither home and/or at work is still exceedingly small, ranging from a low ofan estimated 3% in Peru to a high of nearly 10% in Argentina. Like theregion’s low teledensity rates, low PC penetration rates will hamper growthin the number of internet users. Still, all signs indicate that LatinAmericans without a PC at home will increasingly have the option of usinga computer at their offices, schools, public libraries and communitycenters.

As a result, Latin America remains an emerging internet market, onewhose promise is far from fulfilled. However, this unfulfilled potential iscause for optimism. First of all, the region’s 520 million brand-consciousconsumers represent a sizable market. Moreover, a significant portion ofthose 520 million is young. For example, 49% of Brazilians and 55% ofMexicans are 24 and younger. As they mature and their income andspending power grow, the youth of today will emerge as a powerful force inthe region’s internet market.

The number of active internet users in the region will increaseexponentially over the next four years, from 9.92 million in 2000 to 15.31million in 2001, and to 40.84 million in 2004. However, this considerableuser population is not evenly spread throughout the region. Threecountries, Brazil, Mexico and Argentina, account for approximately 65% ofthe region’s 9.92 million active internet users, and Brazil’s user populationalone represents 40% of the total. Other countries with substantialpopulations, such as Colombia, Peru and Venezuela, currently lack asufficient target market and the infrastructure to substantially contribute tothe region’s overall internet population. Nations like Chile, which hasrelatively high internet penetration rates, are simply too small to play asignificant role in the overall internet market.

Formerly the province of men, the internet user population in LatinAmerica has been tending toward increasing gender parity. Whereas a 1997survey found that 76% of users throughout the region were male, a studyconducted this year determined that the proportion of male users had fallento 60%. Even in countries like Argentina and Mexico, where as recently as1999 approximately 75% of internet users were men, the ratio of male tofemale users is becoming more balanced. The latest studies have revealedthat only 58% of Mexican and 57% of Argentine internet users are men. Onone hand, the growing proportion of female internet users reflects the factthat a majority of the population in countries like Argentina, Brazil andMexico is female. On the other, it is indicative of trends throughout theregion: more women are participating in programs of higher education andsubsequently entering the workforce.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


12


Online advertising expenditures and total e-commerce revenues in LatinAmerica will increase as the number of active internet users and theaverage time spent online increase. Online ad spending will total $163million in 2000, but will rise to $1.64 billion in 2004. Meanwhile, total e-commerce revenues will reach $3.58 billion in 2000, with B2B transactionsof $2.85 billion and B2C transactions of $724 million. As with the region’sinternet user population, Brazil is the powerhouse in e-commerce,accounting for nearly 70% of total e-commerce revenues. Overall e-commerce revenues will increase markedly by 2004, to $66.5 billion,largely fueled by advances in the B2B segment. Businesses of all sizes aswell as national and local governments will increasingly do theirprocurement online. By 2004, B2B transactions will generate 88% of e-commerce revenues in the region.

B2C revenues will increase at a more modest pace, hampered by lowcredit card, PC and telephone penetration rates, fragile infrastructure,limited parcel delivery systems and the fact that online Latin Americanbuyers continue to shop at foreign sites. Consequently, many of theapproximately 1,300 online retailers in Latin America will be hard-pressedto survive, and the likelihood is that number will contract in the near term.

Finally, as with use of the wireless internet, mobile commerce andadvertising will not see significant growth for several years. However, useof wireless financial services will grow precipitously over the next fiveyears, with 24.8 million users of wireless financial content and transactioncapabilities expected by 2005.

This eMarketer report provides a guide to the internet in Latin America. Itcovers the entire Latin American and Caribbean region in its assessment ofinternet users and usage, focusing in particular on Argentina, Brazil andMexico, the region’s three largest internet markets. It examines the currentstate of the web in the region, projects the growth of active internet usersover the next four years and examines key opportunities for—as well asobstacles to—the internet’s growth throughout the region. By combiningeMarketer’s own forecasts of the Latin American internet market withestimates from other research firms, this report is designed to give thereader a complete picture of the internet’s evolution across the region.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

IIMethodology: The eMarketer Difference

I Overview

II Economy and Infrastructure 13

A. Identifying Potential Internet Users 14

B. Telecommunications Infrastructure 18

C. Cable Television Infrastructure 25

D. PC Infrastructure 27

E. Internet Infrastructure 34


IV eCommerce

V eAdvertising

VI eFinance





Index of Charts


13



14


A. Identifying Potential Internet Users

Defining the RegionThis report analyzes internet users and usage in the countries of theCaribbean and Central and South America, with particular attention toArgentina, Brazil and Mexico. The region is linked not only linguisticallyby Spanish and Portuguese, but also by a shared history and longstandingeconomic interdependencies. Although the terms “Latin America” and“Caribbean” are applied broadly to describe the region and circumscribe itgeographically, the countries within, from Argentina to Venezuela, areanything but homogeneous. To the contrary, this report reveals thatconsiderable differences exist in the development of internet marketsacross the region.

PopulationJust over half of Latin America’s people live in Brazil and Mexico. Thesetwo countries are the largest Latin American markets for computers,internet access devices and internet services. Argentina, although only thefourth most populous country in the region (behind Colombia), is the third-largest internet market due to a combination of factors: high per capitaGDP; well-educated population; strong telecommunications infrastructureand high credit card penetration rates.

Latin America’s 520 million inhabitants represent just 8.6% of the world’stotal population. However, the Latin American population is highlyconcentrated in urban areas with well-developed telecommunications,banking, media and transportation infrastructures. This is advantageous forseveral reasons:

■ Cost-effectiveness in developing and expanding technology anddelivery infrastructures

■ Facilitates marketing of internet services using traditional media■ Eases delivery of goods bought and sold online

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Population of Latin America and the Caribbean, 2000 (by Country)Country Population % of Total

Brazil 172.9 33.2%

Mexico 100.3 19.3%

Argentina 37.0 7.1%

Other Countries 209.9 40.4%

TOTAL 520.1 100%

Source: US Census Bureau, 2000; eMarketer, 2000


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Unless otherwise noted, eMarketer counts persons age 14 or older as“internet users.” Therefore, internet penetration figures are percentages ofthis population age 14 and above, not the total population. The table belowpresents the population age 14 and over for the regions’ three leadinginternet markets for the years 2000 to 2004.

Age DistributionLatin America is a significantly younger region than the United States andmany countries in Europe and Asia. For example, 49% of Brazilians and44% of Argentines are 24 and under. In Mexico, fully 64% of thepopulation is less than 30 years old. By contrast, only 35% of Americans,27% of Germans, and 32% of people in England and France are 24 oryounger.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Argentina

Brazil

Mexico

90%

81%

74%

Source: World Bank, 2000

World Bank: Population Living in Urban Areas in Argentina, Brazil, and Mexico,1999

Brazil Mexico Argentina

49+15%

0–2449%25–49

36%

49+13%

0–2455%25–49

32%

49+23%

0–2444%

25–4933%


Age Breakdown of Brazil, Mexico, and Argentina, 2000

Population 14+ of Three Largest Latin American Internet Markets, 2000–2004 (in Millions)

2000 2001 2002 2003 2004

Brazil 126.1 128.1 130.1 132.1 134.1

Mexico 68.6 70.2 71.7 73.2 74.8

Argentina 27.7 28.1 28.5 28.9 29.3

Rest of Region 143.9 147.1 150.3 153.5 156.8

TOTAL 366.3 373.4 380.6 387.7 394.9



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The youth of Latin America constitute a significant block of both currentand future internet users, a fact not lost on governments, developmentorganizations and private-sector consortia throughout the region. Forexample, the Argentine government, supported by funding from the Inter-American Development Bank, recently announced plans to provide internetaccess for all public schools. Today’s Nintendo-demanding children, teensand young adults, currently lacking the purchasing power and secure creditof adults, are tomorrow’s likely cell phone and computer owners – buyingthe latest game console or hot stock.

The region’s low per capita income limits the “target market” for internetservices to approximately 15% of the population, mostly restricted tomembers of the middle class and above. Although the spending power ofLatin America’s middle class is much less than in the United States orEurope, its consumption habits mirror those of middle-class people aroundthe world. Moreover, because they enjoy a generally high level ofeducation, middle-class Latin Americans are likely to have access to a PCwith an internet connection at home, work or school.

Widespread poverty and wildly uneven income distribution, however,puts the internet beyond the reach of most Latin Americans. As the figuresbelow demonstrate, 42.5% (or 43 million) of Mexico’s 100 million peoplelive on the equivalent of $2.00 per day, as do 17.4% (or 30 million) ofBrazil’s 173 million citizens. Until income distribution levels out in Brazil,Mexico and Argentina the market for internet services in Latin Americawill remain a small segment of the total population.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Venezuela (1996)

Peru (1994)

Mexico (1995)

Honduras (1996)

Ecuador (1995)

Colombia (1996)

Chile (1994)

Brazil (1997)

36.4%

41.4%

42.5%

68.8%

52.3%

28.7%

20.3%

17.4%

*1993 prices. Source: World Bank, 2000

World Bank: Population Living on $2.00/Day* or Less in Selected Latin American Countries


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The average GDP per capita is quite low throughout the region, especiallywhen compared to that of the United States. Even the richest 20% of thepopulation in the wealthiest Latin American nations has barely half the percapita income of the richest 20% of US residents.

Only the wealthiest 10% of the population, controlling more than 40% ofthe wealth in countries like Brazil and Mexico, have the disposable incomenecessary to be internet users and repeat online shoppers.

On the whole, the target market in Latin America is educated,cosmopolitan, media-savvy, technologically smart and an early adopter ofelectronic devices. In the short run, internet companies operating in LatinAmerica will be trying to understand and address its needs.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

World Bank: Income Distribution in Selected Latin American Countries and the US, 2000% Income Controlled by: Brazil Chile Mexico Venezuela US

Lowest 20% 2.5% 3.5% 3.6% 3.7% 5.2%

Second 20% 5.5% 6.6% 7.2% 8.4% 10.5%

Third 20% 10.0% 10.9% 11.8% 13.6% 15.6%

Fourth 20% 18.3% 18.1% 19.2% 21.2% 22.4%

Highest 20% 63.8% 61.0% 58.2% 53.1% 46.4%

Highest 10% 47.6% 46.1% 42.8% 37.0% 30.5%

May not add up to 100% due to rounding. Source: World Bank, 2000

$25,902

$17,677

United States

Mexico

Brazil

Argentina

$84,160

$16,350

$11,847

$36,365

$5,452

$3,674

$7,898

Average GDP per Capita, Average per Capita for Richest 20% and Average GDP for Richest 10%: Argentina, Brazil, Mexico, and the US, 2000

Avg. GDP per CapitaWealthiest 20%Wealthiest 10%

Source: eMarketer, 2000; International Monetary Fund (IMF), 2000; MorganStanley Dean Witter, 2000

$110,641


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Other research firms have used different assumptions to calculate targetmarkets:

■ Salomon Smith Barney (SSB) has estimated the penetration rate amongthe top three socioeconomic segments of Latin America’s population tobe roughly 12%, and expects that it will reach 25% in 2003. SSBprojects that by 2003, 13-14% of the region’s total population will bepotential internet users.

■ Morgan Stanley Dean Witter has estimated that on average, potentialinternet users consist of the top 20% of the region’s population.Morgan Stanley’s target market varies by country, ranging from 30%of the population in Argentina, to 25% in Mexico and Chile, 20% inBrazil and 15% in the rest of Latin America.

B.Telecommunications InfrastructureAfter long domination by inefficient state-controlled companies, thetelecommunications market in Latin America has become extremely activein recent years. Privatization of telecommunications services is largelyresponsible for this trend. According to the InternationalTelecommunications Union (ITU), the Americas boasted one-quarter of the89 incumbent public telephone operators privatized worldwide by the endof 1999. Altogether, 70% of countries in the Americas have either partiallyor fully privatized their telecommunication companies and 36% allowcompetition in basic (fixed-line local and long-distance) services.

In Latin America, as in other developing regions, the wireless sector isbeing looked upon as a key to growth in internet usage. Cellular operatorsalready have begun offering mobile internet access, but due to high costs,most initial customers are likely to be business users. Until the cost ofaccess drops considerably and data transmission rates improve, mobileinternet users will remain a small segment of the overall internet userpopulation in Latin America.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Potential Internet Users in Latin America, 2000–2004 (in Millions)Country 2000 2001 2002 2003 2004

Brazil 18.9 19.2 19.5 19.8 20.1

Mexico 10.3 10.5 10.8 11.0 11.2

Argentina 4.2 4.2 4.3 4.3 4.4

Rest of Region 21.6 22.1 22.5 23.0 23.5

Total 55.0 56.0 57.1 58.1 59.2



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One challenge to the growth of the telecommunications market across theregion may come from regulatory bodies. According to the ITU, LatinAmerican countries created 18 new regulatory agencies during the 1990s,giving the region the highest proportion of separate regulatory bodies inthe world. In many countries (Argentina and Mexico being key examples),the new regulatory agencies continue to share jurisdiction and keyregulatory functions with (and even remain under the total of) the sectorministry. According to Frost & Sullivan, Brazil and Chile have been moresuccessful at stimulating competition in the telecommunications sectorthan Argentina and Mexico, where higher barriers to entry remain.

Fixed-Line Telephone DensityLandline telephones are still the primary link between computers and theinternet in Latin America and are likely to remain so until internet accessbecomes more widely available through cable television networks andmobile devices. Therefore, the number of telephone lines per 100 persons,or a country’s teledensity, is an important factor in determining thepotential level of internet use.

Although the presence of telephone lines does not ensure that people willdial in to the internet, low teledensity reduces the possibility. Teledensity isalso an indicator of a nation’s overall economic condition andtechnological development. Like paved roads, schooling and other humandevelopment indicators, it is correlated with internet usage.

Until infrastructure investments can catch up with pent-up demand forfixed-line telephones, teledensity rates will remain low. Fortunately, allsigns indicate that the telecommunications infrastructure will improve overthe next few years, as the forecasts below demonstrate. Increasingteledensity and lower monthly telephone charges are the keys to growth inLatin America’s internet market.

Gross penetration rates, however, may be misleading. First of all, theymask urban-rural disparities. Second, newly installed lines in homes thatalready have telephones may not amount to more people having access tothe internet.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


20


Brazil will show the sharpest increase in teledensity rates. Growth forecastsare also positive for Argentina and Mexico, but the outlook for the rest ofthe region is not as promising. Note that the World Bank, whose projectionsgo as far out as 2010, provides figures that are considerably higher thanthose of Morgan Stanley Dean Witter. As with internet users forecasts,future-looking projections for the number of telephone lines becomeincreasingly unreliable beyond 2004.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

18.0

12.7

15.7

24.1

Average Latin America

Rest of Region

Mexico

Brazil

Argentina

16.0

11.3

13.5

21.3

22.3

13.4

9.8

11.6

16.9

20.8

Morgan Stanley: Telephone Lines per 100 People in Latin America, 2000, 2002, & 2004

200020022004

Source: Morgan Stanley Dean Witter, 2000

24.4

Argentina

Brazil

Mexico

20.1

14.9

11.2

Source: International Telecommunication Union (ITU), 2000

ITU: Telephone Lines per 100 People in Argentina, Brazil, and Mexico, 1999


21


Supplying telephone access to underserved rural areas with predominantlypoor residents remains unprofitable. However, over the next few years,universal service agreements imposed as a result of privatization compeltelephone companies to increase the communication infrastructure in areastraditionally showing low returns on investment.

The Argentine government, for example, is in the process of finalizing [email protected] program, which will provide internet access tolow-income and remote communities at state-sponsored “telecenters”throughout the country. The Brazilian government, with assistance fromprivate sector and non-profit organizations, has plans to install internetkiosks throughout the country.

Telephone and Internet Access CostsBasic telephone costs remain one of the principal obstacles to growth ininternet usage in Latin America. Initial residential connection fees (a one-time charge) tend to be high. Brazilian fees are comparable to thosecharged by local US phone companies, which is very high given thedifference in average incomes.

Calls are metered in Argentina and Brazil on a per-minute or per-pulsebasis, which results in higher overall monthly costs. In Mexico, local callsare unmetered and Mexicans receive 100 local calls as part of their monthlysubscription fee.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

World Bank: Number of Telephones in Latin America, 2000–2004, & 2010 (in millions)Country 2000 2001 2002 2003 2004 2010

Argentina 8.1 8.6 9.0 9.4 9.8 13.1

Brazil 32.5 38.8 43.8 47.9 51.1 81.2

Mexico 12.6 14.8 16.6 18.0 19.3 27.4

Rest of Region 22.1 24.6 26.6 28.4 29.9 40.9

TOTAL LATIN AMERICA 75.3 86.8 96.0 103.7 110.1 162.6

Source: World Bank’s InfoDev, 1999

Morgan Stanley: Number of Telephones in Latin America, 2000–2004 (in Millions)Country 2000 2001 2002 2003 2004

Argentina 7.7 8.1 8.5 8.9 9.4

Brazil 29.4 34.0 37.8 41.0 44.0

Mexico 11.8 13.0 14.2 15.5 17.0

Rest of Region 19.1 21.0 23.0 24.9 26.8

TOTAL LATIN AMERICA 68.1 76.1 83.5 90.4 97.1



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In 1999, the Argentine government took steps to boost internet usage byestablishing low-price telephone numbers designed specifically for internetaccess. According to a report by the US Department of Commerce, thismeasure has since raised the average connection time from 15 to 24minutes.

IDC has estimated that the average monthly cost of internet access in LatinAmerica, including monthly telephone charges and internet access fees, is$53, of which nearly two-thirds is for the telephone calls. The figures forMexico are lower because local calls are not billed on a per-minute basis.

Many Internet Service Providers (ISPs) began offering free internetaccess after Bradesco, one of Brazil’s largest commercial banks,inaugurated its free service in December 1999. However, the idea may havebeen ahead of its time, as current telecommunications regulations do notcompel local phone companies to share connection charges with ISPs.Instead, they compete for a limited pool of online advertising dollars forthe bulk of their revenues.

Because the internet advertising market is simply not large enough tosupport the host of competitors offering free services, a number of high-profile, free ISPs have already failed, even in Brazil, Latin America’s largestinternet market. The likelihood is that the free ISP marketplace willconsolidate further, with the remaining players absorbing the subscribers ofthe failed services. Furthermore, connecting to even free ISPs remainscostly because calls are billed on a per-minute basis in most LatinAmerican countries (with Mexico being the notable exception).

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

IDC: Telephone and Access Fees Reported by InternetUsers in Argentina, Brazil, and Mexico, 2000Country Monthly Monthly Internet

Telephone Charge Access Fee

Argentina $48.00 $28.00

Brazil $29.00 $18.00

Mexico* $23.62 $12.96

* Mexico data from the OECD, 2000. Source: International Data Corp., 2000

ITU: Home and Business Telephone Costs in Argentina, Brazil, and Mexico, 1998–1999Country Connection Connection Monthly Monthly Cost

Fee for Fee for Subscription Subscription of aHome Business Fee for Fee for 3-Minute

Telephone Telephone Home Business Local Service Service Telephone Telephone Call

Service Service

Argentina* $150.08 $150.08 $12.83 $36.42 $0.10

Brazil* $68.94 $68.94 $8.62 $12.93 $0.09

Mexico $110.69 $366.11 $14.50 $19.94 $0.14

* 1998 data. Source: International Telecommunication Union (ITU), 2000


23


Wireless MarketThe latest data from the International Telecommunications Union (ITU)indicate that one in four telephone users in Latin America operates amobile phone. In Argentina and Brazil the mobile penetration rate is 40%and in other markets reaches one out of two. Paraguay and Venezuelabecame the first countries in the region in which mobile phone usersoutnumber those who depend on a fixed-line connection, and Mexico hasjust joined this group. As the number of wireless subscribers grows, thistrend is likely to continue throughout the region.

In addition, companies like Canada’s Nortel Networks are leading theeffort to install fixed-wireless networks across Latin America. Althoughfixed-wireless devices can only be used in a designated location, they dooffer data transmission capabilities that approach throughput rates of fixedlines, making them ideal for Latin America’s rural markets currentlyunderserved by fixed-line telephone companies. The other advantage offixed-wireless systems is that they can be installed more quickly and at alower cost than mobile wireless networks. On the other hand, fixed-wirelessnetworks are unlikely to replace the existing wireline infrastructurebecause line-of-sight problems can interfere with data transmission,rendering fixed-wireless largely inadequate for heavy business use.

Despite growth in the cellular market, the number and percentage ofcellular phones in Latin America as a whole are quite limited in comparisonto other regions of the world, particularly given the size of Latin America’spopulation.

Moreover, it is not clear what percent of those cellular subscriptions areadditional phones for those who already own a fixed-line telephone. Atpresent, the overlap is likely to be high, although it will tend to diminishover time, particularly as less expensive wireless service options likeprepaid calling and Calling Party Pays (CPP) become more widely available.As in other regions with large populations of people with modest means,prepaid service and CPP provide consumers in Latin America with a majorimpetus to use mobile phones. For example, by the end of 1999, nearly85% of Telmex’s Telcel cellular subscribers were on a prepaid plan.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Bernstein: Number of Cellular Subscribers Worldwide,2000–2004 (in Millions)

2000 2001 2002 2003 2004

North America 112.3 143.8 179.1 216.5 256.3

Europe 264.3 366.2 466.8 566.6 650.7

Africa/Middle East 22.2 33.4 47.2 65.0 84.9

Asia/Pacific Rim 200.2 249.2 292.9 343.6 399.7

Latin America 62.3 84.5 105.2 125.0 140.0

TOTAL 661.3 877.1 1,091.2 1,316.7 1,531.6

Source: Sanford C. Bernstein & Co., 2000


24


Wireless TechnologyAll signs suggest that Latin America will remain divided among competingwireless standards. TowerGroup estimates that 51% of current wirelesssubscribers in Latin America remain on analog systems. As the followingfigures show, GSM subscribers represent a small portion of total wirelesssubscribers in Latin America. Although EMC predicts that the number ofGSM subscribers in Latin America will grow considerably by 2004, LatinAmerica will still account for the smallest number, by region, of worldwideGSM subscribers.

Latin American governments have now begun auctioning PCS licenses andservice providers are upgrading existing analog networks to nextgeneration (2G) systems. These developments will provide customers withmore service options. Moving systems from analog to digital will alsofacilitate the growth of the wireless web in Latin America. However,investments in third-generation (3G) technology will not begin to have atangible effect until around 2005, according to most estimates.

Methodology

Overview



eCommerce

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

EMC: Worldwide GSM Subscribers, 2000–2004 (in Millions)REGION 2000 2001 2002 2003 2004

Europe 252.0 320.2 379.5 418.9 439.2

Asia/Pacific Rim 111.5 142.1 172.6 203.0 233.1

Africa 13.4 21.4 31.7 42.9 54.5

US/Canada 8.9 13.1 16.4 19.2 21.7

Middle East 6.3 10.1 16.2 24.7 34.0

Latin America 2.0 4.3 8.3 13.3 18.0

Total GSM Subscribers 394.1 511.2 624.7 722.0 800.5

Source: EMC, 2000

AMPS (Analog)55%

GSM1%

DAMPS/TDMA39%

CDMA5%


ITU: Latin American Cellular Subscribers by Technology, 1998


25


The German investment bank Dresdner Kleinwort Benson estimates that by2005, Latin America will account for 8% of total worldwide investments in3G technology. Europe and Asia will lead the way, with 27% each, followedby Japan, with 21%, and North America, with 17%.

C. Cable Television Infrastructure

Broadband AccessCable modems enable users to connect to the internet at a cost that is onlymarginally greater than the cost of cable television service. They alsoenable the delivery of multimedia content at speeds considerably greaterthan dial-up connections. In addition, they provide users with constant,“always on” internet access, eliminating the inconvenience of dialing into aservice provider. Moreover, cable modem service does not rely on theexisting telecommunications infrastructure, and therefore allows users ofthe service to “leapfrog” over the outdated analog and copper wiretelecommunications infrastructure.

Methodology

Overview



eCommerce

eAdvertising

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

Baskerville Communications: Next-Generation Wireless Technology in Latin America by Number of Users, 2000–2004 (in Millions)

2000 2001 2002 2003 2004

GSM900 0.05 0.15 0.38 0.30 0.35

GSM1900 0.50 0.80 1.00 1.20 1.50

AMPS/TDMA/GSM Multimode 0.00 0.00 0.00 0.00 0.00

2G (TDMA/CDMA/GSM)/3G 0.00 0.00 0.00 0.00 0.00

Source: Baskerville Communications Corp., 2000

Yankee Group: Wireless Technology in Latin America by % of Users, 2000–2004 (in millions) 2000 2001 2002 2003 2004

Analog 36% 22% 13% 5% 2%

2G 64% 78% 86% 92% 92%

2.5G 0% 0% 1% 2% 4%

3G 0% 0% 0% 0% 2%

Source: Yankee Group, 2000


26


Cable modem internet access brings several disadvantages as well. Atpresent, only 3% of Latin America’s population has cable TV. Penetrationrates are low even when compared to the region’s exceeding lowteledensity rates, whereas cable TV penetration rates in the United Statesare similar to telephone penetration rates. In addition, because theygenerally pass homes and not office complexes, cable TV networks will notbe able to serve the business users who are the best potential clients forhigh-speed data access.

Throughout Latin America, nearly 14 million people currently subscribeto cable TV. According to Morgan Stanley Dean Witter, the cable TVaudience will increase to 20.58 million in 2004. Of the major LatinAmerican countries, only Argentina has high cable TV penetration ratesand is likely to become a leader in cable internet access. Approximately48% of Argentine households have cable subscriptions. However, as thetable below indicates, the market is largely saturated and is not expected toexpand to a larger share of households than currently subscribe to cable TVservice.

Methodology

Overview



eCommerce

eAdvertising

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

Morgan Stanley: Number of Cable TV Subscribers in Latin America, 2000–2004 (in Millions)Country 2000 2001 2002 2003 2004

Argentina 5.2 5.3 5.4 5.5 5.6

Brazil 2.6 3.2 3.9 4.7 5.5

Mexico 2.4 2.8 3.5 3.5 3.9

Total Latin America 13.8 15.4 17.1 18.9 20.6


Morgan Stanley: Households with Cable TV in Latin America, 2000–2004Country 2000 2001 2002 2003 2004

Argentina 48% 49% 48% 48% 48%

Brazil 6% 8% 9% 11% 13%

Mexico 12% 13% 15% 16% 18%

Total Latin America 11% 12% 13% 14% 15%



27


D. PC InfrastructureRecent sales data indicate that PC ownership in Latin America will continueto grow over the next few years. The number of PCs shipped to LatinAmerica, which indicates the size of the market, increased byapproximately 50% in both the first and second quarters of 2000.According to IDC, growth was particularly strong in Brazil and Mexico,fueled by falling interest rates and rising demand for internet services inthe former and innovative financing plans aimed at home and smallbusiness users in the latter. Shipments also grew substantially in Argentina,aided by lower tariffs and promotions by ISPs that offered users the optionof purchasing inexpensive computers on installment plans.

Despite indications of growth in PC ownership, the percentage of thepopulation with a PC is still exceedingly small, ranging from a low of anestimated 3% in Peru to a high of nearly 10% in Argentina. At its best, PCpenetration in Latin America is half of what it is in Spain and Portugal, twoof Europe’s poorer and least wired countries.

By comparison, more than half of the US population has a PC. Even themost optimistic forecasts predict that PC penetration rates will not exceed20% in Latin America by 2004. In many countries, the number of PCs perhundred will remain below 10% in 2004. The World Bank’s outlook is evenmore pessimistic: its report on global information infrastructure suggeststhat even if the price of PCs were to drop below $500, this figure wouldremain a significant obstacle to many individuals throughout LatinAmerica.

Methodology

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eCommerce

eAdvertising

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

Argentina

US

Mexico

Latin America Average

Brazil

74%

46%

22%

22%

10%


Morgan Stanley: Cable TV Subscribers amongTelephone Owners in Argentina, Brazil, Mexico, andthe US, 2000


28


In many areas outside of countries like Argentina, Brazil, Chile and Mexico,poor awareness and understanding of technology-related products areother likely impediments to growth in PC ownership and usage. Thus, it isimportant to keep in mind that like the telecommunications market, the PCmarket may be expanding rapidly, but it is doing so from an extremely lowbase and on an uneven basis throughout the region.

Methodology

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eCommerce

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Argentina

Brazil

Mexico

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Index of Charts

Morgan Stanley: PC Penetration in Latin America, 2000–2004Country 2000 2001 2002 2003 2004

Argentina 9.6% 11.1% 12.5% 14.0% 15.4%

Brazil 5.9% 7.5% 9.1% 10.6% 12.1%

Mexico 8.6% 10.2% 11.6% 13.0% 14.4%

Rest of region 6.0% 7.4% 8.6% 10.6% 11.9%

Total Latin America 6.8% 8.3% 9.7% 11.3% 12.7%


Argentina

Brazil

Mexico

4.92

3.63

4.42


ITU: PCs per 100 People in Argentina, Brazil, and Mexico, 1999


29


Although overall per capita PC ownership is low in Brazil and Mexico, theirlarge populations set them ahead of other Latin American countries interms of the number of households with at least one PC. According toJupiter Research, 2.61 million Brazilian households have PCs, which ismore than twice the 1.17 million Mexican households with PCs.Nevertheless, household PC penetration rates remain considerably higher inMexico and Argentina, aided by more competitive pricing and financingoptions.

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

10.5%

8.7%

7.3%

6.1%

5.0%

2004

2003

2002

2001

2000

11.7%

9.8%

8.2%

6.8%

5.7%

16.0%

13.2%

10.9%

9.0%

7.4%

Jupiter: PC Penetration in Argentina, Brazil, and Mexico, 2000–2004

ArgentinaBrazilMexico

Source: Jupiter Research, 2000


30


Latin Americans without PCs at home increasingly have the option of usingthem at their offices, schools, public libraries and community centers. TheArgentine government, for example, is developing a program designed toprovide internet access for all public schools. Programs of this sort arelikely to be emulated throughout the region, particularly as governmentsand private-sector consortia recognize the potential of the youth market.Computer use at work or in school may stimulate demand for homecomputers by affording people the opportunity to experience thetechnology before they buy a PC themselves.

Methodology

Overview



eCommerce

eAdvertising

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

1.7

1.4

1.1

0.9

0.7

2004

2003

2002

2001

2000

2.7

2.2

1.8

1.5

1.2

5.8

4.8

3.9

3.2

2.6

Jupiter: Households with PCs in Argentina, Brazil, andMexico, 2000–2004 (in Millions)

BrazilMexicoArgentina


Morgan Stanley: Household Penetration of PCs in Latin America, 2000–2004 & 2010Country 2000 2002 2004 2010

Argentina 13.6% 15.6% 17.3% 18.4%

Brazil 6.8% 9.0% 10.5% 12.3%

Mexico 15.9% 19.9% 23.0% 25.3%

Rest of Region 5.2% 7.2% 8.5% 9.9%

Total Latin America 8.1% 10.5% 12.2% 14.0%



31


Morgan Stanley Dean Witter estimates that on average, 9% of LatinAmerica’s 217 million employees have PCs. However, the percentage ishigher in Argentina and Mexico, and the overall number is expected togrow in the next five to ten years as more businesses move online. MorganStanley estimates that nearly 20% of the workforce will have a PC by 2004,and close to 30% by 2010.

The majority of Latin Americans still connect to the internet from home.This is unsurprising given that a greater percentage of home PCs thanbusiness PCs are internet-ready. According to Morgan Stanley:

■ 41% of home PCs have an internet connection, while only 31% ofbusiness PCs have internet service

■ In Brazil, twice as many home PCs have internet connections asbusiness PCs (62% to 31%)

■ Argentina and Mexico have a roughly equal percentage of home andbusiness PCs with internet connections

By 2004, Morgan Stanley forecasts that the percentage of business PCswith internet connections will be nearly equal to the percentage of homePCs with web connectivity (64% versus 67%).

Methodology

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Argentina

Brazil

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Index of Charts

Morgan Stanley: Workforce with PC Access in Latin America, 2000–2010Country 2000 2002 2004 2010

Argentina 11.7% 16.7% 21.7% 31.3%

Brazil 7.7% 13.2% 18.6% 27.2%

Mexico 11.7% 16.7% 21.7% 31.3%

Rest of Region 9.5% 14.1% 18.6% 27.2%

TOTAL LATIN AMERICA 9.4% 14.4% 19.4% 28.3%


Morgan Stanley: Business PCs with Internet Connection in Latin America, 2000–2010Country 2000 2002 2004 2010

Argentina 27.2% 45.5% 63.8% 85.0%

Brazil 30.8% 47.3% 63.8% 85.0%

Mexico 29.4% 46.6% 63.8% 85.0%

TOTAL LATIN AMERICA 30.8% 47.3% 63.8% 85.0%



32


Not all PCs are equally “wired” to the internet. As the chart below indicates,86% of internet subscribers connect to the internet through dial-upconnections. Moreover, a significant portion of dial-up connections takesplace over slow 33.6 or 28.8 kbps modems. An IDC survey found that onaverage, 38% of Latin American internet users were connecting at speedsof 33.6 kbps or less.

Methodology

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eCommerce

eAdvertising

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

Dial–Up86%

Cable Modem1%Wireless Connection1%

DedicatedLine10%

DSL2%


Morgan Stanley: Internet Subscribers by Access Type,2000

28.8 KBpsor slower

7%Other8%

33.6 KBps19%

56 KBps60%

Cable Modem2% ISDN or

xDSL4%

May not add up to 100% due to rounding.Source: International Data Corp. (IDC), 2000

IDC: Internet Access Speeds in Argentina, 2000


33


Cable modems are becoming increasingly available in major urban areas,but they provide fast access predominantly to home users and at a pricepoint that may make them unattractive to many residential customers. DSLconnections, which pass both households and offices, offer the technologymost likely to speed up internet access and data transmission in LatinAmerica, although DSL, too, will initially be beyond the reach of most LatinAmerican consumers.

For example, Argentina’s second largest telephone company, TelecomArgentina, recently began offering DSL service in Buenos Aires and twoother major cities (Rosario and Córdoba) for a monthly charge of $99 (withthe cost divided almost evenly between use of the telephone line andinternet access). Local cable operators offer similar service forapproximately $70 per month.

Methodology

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

28.8 KBpsor slower12%

Other5%

33.6 KBps32%

56 KBps45%

Cable Modem2% ISDN

or xDSL4%


IDC: Internet Access Speeds in Brazil, 2000

28.8 KBpsor slower12%

Other15%

33.6 KBps14%

56 KBps46%

Cable Modem4%

ISDN or xDSL 10%


IDC: Internet Access Speeds in Mexico, 2000


34


Dial-up connections made with a 28.8 or 33.6 kbps modem result in anentirely different internet experience than connections made with a fast 56kbps modem or a high-speed dedicated line. Downloading software, musicor viewing streaming video can be an excruciating exercise with a slowconnection. Illustrative of the effect of speed are the differing transfer timesfor a 10-megabyte file: up to an hour on a 28.8 kbps modem, 10-13minutes on an ISDN line and approximately one minute over a T-1 line.

E. Internet InfrastructureBeyond low teledensity and PC ownership rates across the region andwildly uneven income distribution (and correspondingly low levels ofdisposable income), an additional factor complicating the expansion ofinternet use is a lack of information technology (IT) infrastructure betweenLatin American nations, particularly the lack of a major internet backboneand few internet access points. According a study by the US Department ofCommerce, IT spending per capita tends to be much lower in Latin Americathan in the United States, which, in turn, hinders growth in the region’sinternet market.

Tariffs on IT and telecommunications products remain relatively high inrelation to import duties imposed by other countries throughout the world.At present, only El Salvador and Costa Rica are parties to the 1997Information Technology Agreement (ITA). Argentina, Brazil and othermembers of the MERCOSUR common market have established a commonexternal tariff (CET) on all telecommunications and IT equipment importedfrom non-MERCOSUR countries. This will average a maximum of 16% by2006.

Network CapacityA major impediment to the development of a bigger internet market hasbeen insufficient internet infrastructure. Latin America has the fewestrouters–five–of any region in the world. This in part explains why internetservice quality in Latin America, measured by average response times andpercent packet loss, is low relative to the rest of the world. For example, inLatin America, the average response time–the time required for a mass ofdata to make a round trip from point A to point B–is three times as slow asthe average response time in Europe and four times as slow as in the UnitedStates.

Methodology

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eCommerce

eAdvertising

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Argentina

Brazil

Mexico

Other Countries

Index of Charts


35


Good news is on the horizon, however. International infrastructurecapacity to Latin America is increasing. Circuits between Latin Americaand the United States are growing, and major investments by companiessuch as BellSouth, Bell Canada, Global Crossing, Spain’s Telefonica andBrazil’s Embratel (owned by WorldCom), including in undersea cables, willcreate a stronger backbone in the region and between the region andEurope and the US. Investments will cater initially to the lucrative businessand upscale residential markets, and then diffuse to the remainder of theconsumer segment.

Internet HostsThe steady increase in the number of internet hosts registered under LatinAmerican country domains indicates that the region’s internetinfrastructure is growing rapidly. Although not a perfect measure of theextent of local content, the number of local hosts does point to the presenceof web sites in a particular country. Between July 1999 and July 2000, thenumber of internet hosts with Latin American domain names soared forArgentina, Brazil and Mexico, increasing by more than 200% in the lattertwo countries.

Methodology

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Argentina

Brazil

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Index of Charts

ITR: Regional Average Response Time, Packet Loss (Past 30 Days), and Number of Routers, 2000Region Avg. Response Avg. Packet Loss # of Routers

Time (milliseconds)

Asia 340 9% 10

Australia 397 0% 9

Europe 215 2% 16

North America 156 0% 24

Latin America 635 3% 5

Data based on average of 30 days prior to 10/19/00. Source: Internet Traffic Report, 2000

Network Wizards: Internet Hosts in Brazil, Mexico, and Argentina, 1995–July 2000Country 1995 1996 1997 1998 Jan–99 Jul–99 Jan–00 Jul–00

Brazil 800 20,113 77,148 117,200 215,086 310,138 446,444 662,910

Mexico 6,656 13,787 29,840 41,659 112,620 224,239 404,873 495,747

Argentina 1,262 5,312 12,688 19,982 66,545 101,833 142,470 175,303

Source: Network Wizards, 2000


36


Internet ContentThe native language of most Latin Americans is Spanish or Portuguese.English remains the most important second language throughout theregion, and its influence over business, media and popular culturecontinues to grow as Latin America becomes more fully integrated in theworld economy. Furthermore, as the following table demonstrates, theoverwhelming majority of internet content is in English.

Although Spanish and Portuguese account for less than 3% and 2% of totalweb pages, respectively, language has not been a barrier to the current mixof Latin American internet users, in part because they tend to be wealthierand better educated than the average Latin American. Moreover, thenumber of Spanish- and Portuguese-language sites on the web is growingrapidly, spurred in part by the recent launching of heavily financed portalsites such as StarMedia, Terra Networks, QuePasa.com, and Spanish andPortuguese versions of Yahoo!, AltaVista and AOL among others. Localcontent producers have contributed to this trend. In fact, Argentina hasbecome the largest producer of Spanish-language content on the internet.

The linguistic breakdown of the internet will change over time, spurredin part by a rise in the number of non-English-speaking users. As Spanishand Portuguese web content grows, the number of internet users whounderstand only Spanish or Portuguese is likely to increase, extending to auser population that is less cosmopolitan than today’s.

Methodology

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eCommerce

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

English214.3 (68.4%)

Total =313.5

Portuguese4.3 (1.4%)

Spanish7.6 (2.4%)

Other87.3 (27.8%)

Source: VilaWeb, 2000

VilaWeb: Webpages in English and Other Languages(in millions)

IIIMethodology: The eMarketer Difference

I Overview


III Internet Users and eDemographics 37

A. Internet Users 38

B. Usage and Demographics 43

C. Wireless Users and Penetration 46

IV eCommerce

V eAdvertising

VI eFinance





Index of Charts


37



38


A. Internet UserseMarketer estimates that there are 9.9 million internet users currently inLatin America. By the end of 2004, there will be almost 41 million internetusers in the region.

Maintaining this level of growth in internet users depends on a number ofinterrelated factors:

■ Continued investment in the region’s internet infrastructure■ Ongoing deregulation of telecommunications markets■ Increased teledensity■ Declining telephone and ISP costs■ Rising PC ownership■ Adoption of alternative information appliances (cell phones, PDAs)■ Sustained economic stability, particularly in the region’s core internet

markets (Argentina, Brazil and Mexico)Although Latin America’s internet user base will increase exponentiallyover the next few years, its share of the global internet will remain modest.By 2004, Latin America’s 40.84 million internet users will equal 6.4% of the640.20 million users worldwide, up from 4.3% in 2000.

Market Concentration Latin America’s three most populous countries—Brazil, Mexico andArgentina—comprise approximately 65% of the region’s 9.92 millioninternet users and are expected to maintain this primacy through 2004.Many nations are too poor to develop a significant internal internet market.

Other countries with substantial populations, such as Colombia, Peru andVenezuela, currently lack the technology infrastructure and a sufficienttarget market to substantially contribute to Latin America’s overall internetpopulation, while nations like Chile, even with its relatively high internetpenetration rates and healthy e-commerce sector, are simply too small toplay a leading role in the region’s overall internet market. As a result,analyses of the internet in Latin America mostly focus on Brazil, Mexicoand Argentina.

Methodology

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eCommerce

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Index of Charts

9.9 (4%)

15.3 (5%)

22.1 (6%)

31.0 (6%)

2000

2001

2002

2003

2004 40.8 (6%)

Source: eMarketer, 2000

Internet Users in Latin America, 2000–2004 (in Millionsand % of world total)


39


Brazil drives much of the growth of the internet throughout Latin America.Of the 9.9 million active users in 2000, nearly 40% reside in Brazil (3.9million active users). This rate remains relatively constant through 2004with only slight shifts in the shares of users. For the foreseeable future,Brazil will retain the greater part of Latin America’s internet users.

Methodology

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eCommerce

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Argentina

Brazil

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Index of Charts

Internet Users in Latin America, 2000–2004 (in Millions)Country 2000 2001 2002 2003 2004

Brazil 3.9 6.1 8.8 12.5 16.4

Mexico 1.5 2.3 3.2 4.6 6.4

Argentina 1.0 1.5 2.0 2.5 3.0

Rest of Region 3.5 5.5 8.0 11.4 15.0

TOTAL LATIN AMERICA 9.9 15.3 22.1 31.0 40.8


Brazil3.9 (39.3%)

Mexico1.5 (15.3%)

Argentina1.0 (10.0%)

Rest of Region 3.5 (35.4%)

Brazil16.4 (40.2%)

Mexico6.4 (15.7%)

Argentina3.0 (7.4%)

Rest of Region15.0 (36.7%)

2000

Concentration of Internet Users in Latin America, 2000 & 2004 (in Millions and % of Latin American Internet Users)

2004


Total = 40.8

Total = 9.9


40


Despite the exponential growth expected in the number of internet usersfrom 2000 to 2004, penetration rates throughout Latin America remainlow, particularly when compared to countries like the United States. In2000, the percentage of the population over the age of 14 that actively usesthe internet in the United States is a massive 39.8%, whereas penetrationrates remain in the single digits across Latin America.

Another indicator that Latin America’s internet market is in its infancy isthe percentage of households that have internet access: according toMorgan Stanley Dean Witter, single-digit percentages prevail across LatinAmerica. Morgan Stanley projects that this pattern will prevail for theforeseeable future: by 2004, for example, only one country–Mexico–willhave households with an internet access rate greater than 10%.

Methodology

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Argentina

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Index of Charts

Internet Users in Latin America, 2000–2004 (as a % of Population 14+)Country 2000 2001 2002 2003 2004

Brazil 3.1% 4.8% 6.8% 9.5% 12.3%

Mexico 2.2% 3.2% 4.5% 6.3% 8.6%

Argentina 3.6% 5.3% 7.1% 8.6% 10.3%

Rest of Region 2.4% 3.7% 5.4% 7.4% 9.6%


US 39.8% 46.0% 51.9% 57.8% 62.1%


8%

6%

9%

9%

TOTAL LATIN AMERICA

Rest of Region

Argentina

Mexico

Brazil

6%

4%

7%

9%

7%

3%

2%

4%

4%

4%

Morgan Stanley: Latin American Households with Internet Access, 2000, 2002, & 2004

200020022004


13%


41


Use of the internet will not spread to a broader segment of the populationuntil the price of access (including capital costs for equipment andoperating or connection costs) decreases substantially and incomes rise formore inhabitants across the region.

Rather than comparing penetration rates among the entire populationage 14 and above in a nation like Mexico, where 43% of the countrysubsists on $2.00 per day or less, to the rates of internet users among acomparable portion of the population in the United States, with its largemiddle class, a more useful metric to apply is the penetration rate amongthe top 15% of the population.

As the following table shows, the percentage of active internet users inthis smaller pool begins to approach (and, in the case of Argentina andBrazil by 2003-2004, exceed) overall penetration rates in the United States.

Comparative Estimates of Internet UserseMarketer’s estimates are based on active internet users–those who areonline for at least an hour a week. Other research firms employ differentand often broader criteria when calculating the number of internet users,counting as “internet users,” for example, all those with access to theinternet, the number of internet subscribers or all those people who haveever used the internet within the past 30, 60 or 365 days. No definition isright or wrong, but certain definitions are more illuminating than others,and depending on the criteria, estimates of the number of internet usersmay be dramatically higher or lower.

Many other variables go into internet market forecasts, from estimates ofthe number of users per internet subscription to annual growth rates forinternet use to projections of the number of internet-ready computers ineach country to teledensity and cable penetration rates to economic anddemographic factors.

Methodology

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eCommerce

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Argentina

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Index of Charts

Internet Users in Latin America, 2000–2004 (as a % of Top 15% of Population 14+)Country 2000 2001 2002 2003 2004

Brazil 20.7% 31.7% 45.0% 63.1% 81.6%

Mexico 14.8% 21.4% 30.1% 41.9% 57.1%

Argentina 24.0% 35.2% 47.3% 57.4% 68.6%

Rest of Region 16.2% 24.9% 35.7% 49.5% 63.8%


US (Total Adults) 39.8% 46.0% 51.9% 57.8% 62.1%



42


The following figures and the country profiles at the end of the reportpresent forecasts from other research firms next to eMarketer’s estimates inorder to give the reader a complete picture of the internet landscape.Because eMarketer’s definition of an active internet user is restricted topeople over the age of 14 who are online at least once a week for at least anhour, our estimates tend to be somewhat lower than other research firms.

Research firms project slow, but steady growth in the number of internetusers throughout the decade. Jupiter estimates 66.65 million internet usersin the region by 2005, while Morgan Stanley Dean Witter forecasts asmaller base of 52.19 by 2005. According to Morgan Stanley, the onlinepopulation in Latin America will reach 87.34 million users in 2010.

Methodology

Overview



eCommerce

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

45.5

40.8

Jupiter Research

Morgan Stanley

IDC

Pegasus Research

eMarketer

31.9

28.1

23.4

16.8

22.1

16.0

13.6

13.2

9.1

9.9

Comparative Estimates: Internet Users in Latin America, 2000, 2002, & 2004 (in Millions)

200020022004

Source: eMarketer, 2000; various, as noted

55.1

Morgan Stanley: Internet Subscriptions in Latin America, 2000–2004 (in Millions)

2000 2001 2002 2003 2004

Brazil 4.0 6.0 8.4 11.1 14.2

Mexico 2.4 3.8 5.5 7.2 9.1

Argentina 0.9 1.5 2.1 2.8 3.5

Rest of Region 4.0 6.2 8.7 12.3 15.7

Total Latin America 11.4 17.5 24.7 33.4 42.4

Note: May not add precisely due to rounding.Source: Morgan Stanley Dean Witter, 2000


43


Given the numerous variables on which growth in the internet marketdepends, forecasts that look beyond 2004 have a high propensity forunreliability. However, even the most optimistic estimates do highlight thefact that even by 2010, the number of internet users in the Latin Americanregion, which has a portion of the world’s population similar to that ofNorth America, will not surpass the number of users in North America in2000.

B. Usage and Demographics

Increasing Gender ParityThe gender disparity that characterized the early universe of internet usersin Latin America is giving way to increasing gender parity, particularly inArgentina and Mexico. In 1999, a Nazca Saatchi & Saatchi surveyestimated that approximately 75% of those online in Mexico and Argentinawere men.

More recently, the Argentine research firm Prince & Cooke has foundthat only 57% of internet users in Argentina are men, while NetValue hassimilarly determined that 58% of Mexican users are men.

These results compare favorably with overall estimates for the region bythe market research firm TGI Latina, which puts the split at 60% male and40% female. By contrast, researchers expect complete gender equalityamong internet users in the United States in 2001. Nevertheless, the LatinAmerican internet universe has evolved considerably since 1997, when76% of internet users were male.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Jupiter Research

Morgan Stanley

66.7

52.2

Source: as noted, 2000

Comparative Estimates: Internet Users in Latin America, 2005 (in Millions)


44


Youth Is AllLatin American internet users are young, in large part because the region’spopulation is young. According to Nazca Saatchi & Saatchi, the mean agefor the region’s total population is 24, while the TGI Latina study cited onZonalatina.com found the mean age for internet users to be 27.

Access PreferencesMost Latin Americans continue to access the internet from home. However,by 2004, Morgan Stanley Dean Witter estimates that the balance will shiftto the workplace. Applying Morgan Stanley’s percentages to eMarketer’sinternet user projections, we estimate the number of home internet userswill increase from 5.06 million in 2000 to 17.56 million in 2004. Bycomparison, the number of business users will shoot up from 3.37 millionin 2000 to 20.42 million in 2004. Thus, by 2004, business users will grow tohalf of the total user population, up from one-third in 2000.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Mexico**

Brazil*

42%

43%

58%

57%

Regional Average****

Argentina***

40%

43%

60%

57%

Internet Users in Latin America, 2000 (by Gender)

Female Male

Source: * Media Metrix, 2000, ** NetValue, 2000, *** Prince & Cooke, 2000; **** TGI Latina, 2000

Total Region*

Internet Users**

24

27

Source: *Nazca Saatchi & Saatchi, 1999; **TGI Latina, 2000

Mean Age of Population and of Internet Users in Latin America, 1999–2000


45


TGI Latina found not only slightly more conservative numbers but alsoconsiderable overlap in the location of internet access. For example, thestudy revealed that 24% of home users also access the internet at work,while 27% of those who access the internet from the workplace also do soat home.

Low workplace penetration rates for internet access account in part for thefact that a larger percentage of Latin Americans access the internet fromhome. According to Morgan Stanley Dean Witter, 3% or less of theworkforce has access to the internet. Morgan Stanley projects that thispercentage will rise to double-digit figures (14%) by 2004.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

7%

43%

Educ/Gov/Other

Business

Home

9%

41%

50%

15%

34%

51%

Morgan Stanley: Latin American Internet Users by Location of Access, 2000, 2002, & 2004

200020022004


50%

TGI Latina: Latin American Internet Users by Locationof Access, 2000

Use at Use at Use at UseHome Work School Elsewhere

Home Users 100% 24% 10% 1%

Work Users 27% 100% 6% 2%

School Users 16% 8% 100% 4%

Other Place Users 3% 5% 8% 100%

Source: TGI Latina, 2000

Latin American Internet Users by Location of Access, 2000–2004 (in Millions)

2000 2001 2002 2003 2004

Home 5.1 7.8 11.1 14.3 17.6

Business 3.4 5.8 9.1 14.3 20.4

Educational/Gov’t. Institution 1.5 1.7 2.0 2.5 2.9

Total 9.9 15.3 22.1 31.0 40.8

Source: Morgan Stanley Dean Witter, 2000; eMarketer, 2000


46


Usage PreferencesAccording to TGI Latina, shopping was by far the least frequent activity ofLatin American internet users, while e-mail was the most popular activity,particularly among home users. The study found that within 30 days offilling out the survey questionnaire, 69% of home users utilized e-mail.

C.Wireless Users and PenetrationAnalysts expect the wireless market in Latin America to grow aggressivelyover the next few years, even as cellular operators work to upgrade theirnetworks. The investment bank Sanford C. Bernstein forecasts an increasein the number of subscribers from 62.3 million in 2000 to 140 million in2004. Growth rates in the number of Latin American subscribers will benearly equal to those in Europe and exceed those in North America.

Figures supplied by Merrill Lynch (extrapolated from Dataquest andGlobal Mobile projections) are considerably higher, but this may beattributed to the fact that they include all wireless subscribers (includingPDAs and other devices), rather than simply mobile phone users.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

TGI Latina: Internet Activities of Survey Respondents in the Previous 30 Days

Home Work School Other Place Users Users Users Users

eMail 69% 63% 46% 37%

Read News 33% 33% 21% 16%

Visit a Chat Room 31% 16% 28% 31%

Shopping for Business 4% 7% 1% 1%


Morgan Stanley: Workforce with Internet Access in Latin America, 2000–2010

2000 2002 2004 2010

Brazil 2% 6% 12% 23%

Mexico 3% 8% 14% 27%

Argentina 3% 8% 14% 27%

Chile 3% 7% 12% 23%

Rest of Region 3% 7% 12% 23%

TOTAL LATIN AMERICA 3% 7% 12% 24%



47


The Gartner Group predicts that Latin America’s share of the worldwidecellular market will increase steadily, from 10% in 2000 to 14% in 2003.Meanwhile, Sanford Bernstein estimates that penetration rates will risefrom 12% of Latin America’s population in 2000 to 25% in 2004. Bycomparison, projections suggest that more than 80% of the European andNorth American population will be using cellular phones in 2004.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

North America19%

LatinAmerica

10%

Middle East/Africa 4%

Europe35%

Asia/Pacific Rim32%

Source: Gartner Group, 2000

Gartner: Worldwide Cellular Market, 2000 (as a % of Total Cellular Phones Installed)

Comparative Estimates: Wireless Subscribers in Latin America, 2000–2004 (in Millions)

2000 2001 2002 2003 2004

Merrill Lynch 71.0 106.0 146.0 191.0 –

Sanford C. Bernstein 62.3 84.5 105.2 125.0 140.0

EMC 61.7 90.0 123.4 158.2 189.2

Yankee Group 56.1 73.7 88.5 101.5 112.9

Gartner Group 52.7 71.9 96.9 127.6 –

Source: various, as noted, 2000

Comparative Estimates: Mobile Phone Penetration in Latin America, 2000–2004

2000 2001 2002 2003 2004

EMC 13.6% 17.1% 19.8% 24.3% 26.1%

Sanford C. Bernstein 13.0% 16.0% 20.0% 23.0% 25.0%

Yankee Group 12.1% 15.7% 18.6% 21.0% 23.1%

Kagan International Cellular 5.8% – – – –



48


Overall penetration in the region’s three largest markets is considerablyhigher, according to research by the ITU. In Mexico, the number of wirelesssubscribers recently surpassed the number of fixed-line telephones.

Handset SalesMobile handset sales will increase dramatically over the next few years asLatin American carriers strive to meet the pent-up demand for wirelessservices. By 2004, the investment bank Sanford C. Bernstein expects thathandset sales in Latin America will exceed 86 million, resulting in acompound annual growth rate of 44.1%, third-highest in the world behindEurope and Africa and the Middle East, and well ahead of North America,the Asia Pacific region, Japan and China. However, Latin America’s shareof worldwide handset sales will decline, from an estimated 9.4% in 2000 toa projected 7.1% in 2004. Sales volume will remain highest in Europe, withNorth America a distant second.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Argentina

Brazil

Mexico

12.12 (37.6%)

8.95 (37.6%)

7.83 (41.4%)


ITU: Cellular Mobile Subscribers per 100 Inhabitants and as % of Total Telephone Subscribers in Argentina, Brazil, and Mexico, 1999

39.64 (9.4%)

53.41 (9.1%)

66.40 (8.6%)

80.55 (8.2%)

2000

2001

2002

2003

2004 86.17 (7.1%)

Source: Sanford C. Bernstein, 2000

Sanford C. Bernstein: Handset Sales in Latin America, 2000–2004 (in Millions and as a % of Total Worldwide Sales)


49


Wireless Phone ChargesThe dramatic rise in the number of cellular subscribers and the increase incompetition among wireless service providers across the region havegenerally translated into falling wireless rates. According to research by theYankee Group, average wireless rates in Latin America fell 15% from thesecond quarter of 1999 to the second quarter of 2000. The Yankee Groupbases its pricing analysis on monthly access fees, usage costs after minutesbundled in monthly plans, and taxes, focusing on wireless costs in majorcities (where the majority of subscribers can be found).

Many carriers offer services that employ prepaid monthly cards as wellas one-rate plans that include roaming and long-distance charges for a flatmonthly fee. Even as carriers aim to segment the market with innovativepricing and service offerings, prices have increased in some Latin Americanmarkets, most notably Chile, Colombia and Mexico. Increasedinfrastructure investments may account for the rise in Chile and Mexico,while the Mexican market is also less competitive than others in LatinAmerica. Brazil’s telecommunications regulator, ANATEL, recentlyauthorized an increase in the price of basic wireless service, which willlikely vary between 3 and 10%.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Average

Venezuela

Uruguay

Peru

Mexico

Colombia

Chile

Argentina

-15%

-16%

-34%

-12%

5%

6%

26%

-18%


Yankee Group: Changes in Wireless Rates for Selected Markets, 1999–2000


50


Wireless InternetThe Latin American cellular market is currently divided between a numberof competing cellular standards, with approximately half of the region stillon analog systems. Governments are preparing now for the sale of third-generation (3G) cellular licenses, which are expected to be lucrative andgenerate considerable interest. Foreign operators such as Spain’s Telefonicaand the US’ BellSouth are already active participants in the region’s cellularmarket. Because the number of mobile handsets exceeds the number ofpersonal computers in most Latin American countries, and new mobilephones are less expensive than PCs throughout the region, many analystsexpect that Latin Americans will increasingly access the internet overwireless devices. Dataquest, for example, estimates that the number ofinternet-enabled mobile and handheld computers in Latin America willclimb from 1.27 million in 2000 to more than 101 million in 2003.

The number of wireless operators in Latin America offering services basedon the Wireless Access Protocol (WAP) has risen dramatically in 2000: 23cellular operators in Latin America’s six largest wireless markets(Argentina, Brazil, Chile, Colombia, Mexico and Venezuela) now offer WAPservices (up from seven in mid-2000). However, cost is currently the chiefimpediment to wider adoption of wireless internet service, as users mustupgrade to internet-ready phones and then pay by the minute to accesscontent on their browser-equipped phones. Charges can be considerable,given the slow transmission rates. For example, the Yankee Group reportedthat Smartcom PCS, Chile’s first mobile internet service provider, chargesan activation fee of $17.50, a monthly charge of $8.75 (in addition to users’monthly plan fees) and standard airtime charges.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

1.27

12.04

44.40

101.48

Source: Dataquest, 2000

Dataquest: Internet–Enabled Mobile/Handheld Computers in Latin America, 2000–2003 (in Millions)


51


Some operators are “bundling” access packages, allowing users to connectto the web from a cellular phone, handheld computer or portable laptop inan effort to boost internet adoption rates. However, the initial market forthis type of service, even if offered in conjunction with low-cost cellularphones (or perhaps handsets with price subsidies) and handheld computersand reduced internet access fees and phone tariffs, is likely to be limited tobusiness and high-income personal users. In addition, the Yankee Grouprevealed that a lack of relevant local content has discouraged wideradoption of the new service. As with fixed-line internet content,developing wireless content specific to individual countries, or even cities,will be a crucial factor in spurring adoption of the new technology.

Even if cellular phones and wireless devices are well-suited to someinternet applications, such as instant messaging, checking e-mail andscanning stock quotes, they cannot at present replicate the experience ofaccessing the internet on a larger screen. Consequently, users will likelylimit the types of purchases they make with their wireless devices toinexpensive goods like movie and concert tickets or to intangible itemssuch as stock trades and banking applications, which do not require highresolution pictures or extensive text descriptions. Accordingly, Ovumpredicts that the number of people accessing the internet from mobiledevices (phones, PDAs, etc.) will not see significant growth until 2003.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Ovum: Worldwide Wireless Internet Users, 2000–2004 (in Millions)REGION 2000 2001 2002 2003 2004

Asia 5.9 15.0 35.0 67.4 109.1

Europe 0.07 0.9 25.0 68.4 115.5

N. America 0.02 0.3 14.0 37.5 63.7

Latin America 0.0 0.01 0.2 9.5 20.5

Africa/Middle East 0.0 0.03 2.1 6.7 13.7

Total 6.0 16.2 76.3 189.5 322.5

Source: Ovum, 2000


52


The Strategis Group and IDC, on the other hand, see a larger market for thewireless internet, starting primarily with users of data transmissioncapabilities and short messaging services. IDC, for example, predicts that 71million Latin Americans will subscribe to mobile data services by 2004,with the number of WAP users rising from 500,000 in 2000 to more than 19million in 2004. The Strategis Group cautions that growth of the wirelessinternet depends on the wide availability of handsets appropriate to allmarket segments and up-to-the-minute information that users can accessquickly. This latter point will be particularly important until 2003, whilethe majority of users will still be on slower 2G networks.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Strategis Group: Wireless Data Users in Latin Americaby Technology, 2000–2007 (in Millions)

2000 2001 2002 2003 2004 2005 2006 2007

3G 0.00 0.00 0.00 0.33 1.18 3.96 10.85 22.86

2.5G 0.00 0.99 3.58 6.29 10.75 16.01 20.43 23.22

2G 1.39 4.72 7.61 6.56 4.62 3.44 2.26 1.53

Total 1.39 5.71 11.19 13.18 16.55 23.41 33.54 47.61

Source: The Strategis Group, 2000

IVMethodology: The eMarketer Difference

I Overview



IV eCommerce 53

A.Total eCommerce 54

B. B2C eCommerce 58

C. B2B eCommerce 69

D. mCommerce 75

V eAdvertising

VI eFinance





Index of Charts


53



54


eMarketer defines an electronic commerce purchase of a product or serviceas one in which the buyer initiates and completes the entire purchase order,or contract, via the internet (including via e-mail). How the merchantchooses to process the transaction order (i.e., manually or electronically), orhow the product is actually delivered, are irrelevant to this definition. Otherresearchers, with more liberal definitions, will often include revenueswhich are “facilitated” or “influenced” by the internet, such as when aperson researches merchandise online but then buys the item offline.

A.Total eCommerceTotal e-commerce revenues in Latin America will reach $3.58 billion in2000, with B2B transactions of $2.85 billion and B2C transactions of $724million.

Overall e-commerce revenues will increase markedly by 2004, largelyfueled by advances in the B2B segment. Businesses of all sizes as well asnational and local governments will increasingly do their procurementonline. The number of B2C sites will likely contract in the near term.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

$8.11

$5.49

$3.31

$1.76

$0.73

eCommerce in Latin America, 2000–2004 (in billions)

2000

2001

2002

2003

2004

$2.85

$7.87

$9.63

$17.39

$20.70

$33.63

$39.12

$58.39

$66.50


$3.58

B2B

B2C

Total


55


Despite the more optimistic assessment of e-commerce in the region, LatinAmerica’s share of worldwide e-commerce remains small, accounting forjust over 1% of the total transaction volume. Only the Middle East andAfrica represent a smaller share of the pie.

Globally, e-commerce will see an upward trend over the next few years. Astudy conducted by The RED Consultancy for DHL Worldwide Expressamong several hundred companies in 12 countries with more than $15million in revenues found that 86% of companies expect increased totalsales as a result of trading online. However, the survey also revealed thesignificant challenges that lie ahead:

■ 74% of companies lack a dedicated e-commerce department and■ 79% of businesses worldwide are not currently trading on the internet

From 2000 to 2004, Latin America’s share of worldwide e-commercetransactions will increase slightly, but will hover around 2% of the total.Europe will be the big gainer worldwide in terms of market share. In LatinAmerica, B2B transactions will account for an increasing share of the total,rising from 79.8% in 2000 to 87.8% in 2004.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

North America$206.73 (72.3%)

Total = $285.88

Latin America$3.58 (1.3%)

Middle East and Africa$1.88 (0.7%)

Europe$34.30 (12.0%)

Asia/Pacific Rim$39.3913.8%


Worldwide eCommerce Distribution by Region, 2000 (in Billions)

Worldwide eCommerce Distribution by Region, 2000–2004Region 2000 2001 2002 2003 2004

North America 72.3% 71.1% 66.9% 61.4% 56.2%

Europe 12.0% 12.5% 16.8% 23.2% 30.6%

Asia/Pacific Rim 13.8% 14.0% 13.6% 12.6% 10.6%

Latin America 1.3% 1.8% 2.1% 2.2% 2.1%

Middle East and Africa 0.7% 0.6% 0.6% 0.6% 0.6%

Total 100% 100% 100% 100% 100%

Notes: May not add up to 100% due to rounding. Source: eMarketer, 2000


56


With its sizeable population heavily concentrated in large cities, LatinAmerica’s potential for e-commerce remains vast. Brazil, the largest, mostpopulous country in the region, is by far the leading market for internetcommerce in both the B2B and B2C segments. It has an advanced, highlyautomated industrial sector that will benefit considerably from the costsavings associated with online procurement, and a large, fairly cohesiveconsumer market located primarily in urban areas. All countries, however,will see impressive growth in e-commerce revenues over the next fewyears, although the B2B sector will grow most quickly. Revenues in the B2Csegment will also increase, but a familiar set of factors–low credit card, PCand telephone penetration rates, fragile infrastructure, limited parceldelivery systems and high internet access costs–will continue to hindergrowth across the region.

Brazil, the powerhouse for all things internet in Latin America, will accountfor nearly 70% of the region’s e-commerce revenues in 2000. Its share willdrop to 60% by 2004 as e-commerce increases in the rest of the region.Mexico’s share in particular will show the largest growth, fueled byindustrial and assembly operations that are tightly linked to the globalsupply chain. Meanwhile, Argentine e-commerce will develop at a moremodest pace.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

eCommerce in Latin America, 2000–2004 (in Billions)Country 2000 2001 2002 2003 2004

Argentina $0.32 $0.87 $2.28 $3.91 $6.65

Brazil $2.47 $6.55 $12.63 $24.25 $39.90

Mexico $0.55 $1.54 $4.14 $7.43 $13.30

Rest of Region $0.24 $0.67 $1.66 $3.52 $6.65

Total $3.58 $9.63 $20.70 $39.12 $66.50

Note: Figures may not add up precisely due to rounding. Source: eMarketer, 2000


57


eMarketer’s estimate tends to be higher than forecasts by other firms (withthe exception of Forrester Research), as the following chart shows.Forrester Research has released the most optimistic estimates of e-commerce revenue in the region based on assumptions about“hypergrowth” in online B2B transactions. In addition, Forrester’s numbersare greater in part because they include EDI transactions as part of theirprojections.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Argentina$0.32(9%)

2000 Rest ofRegion

$0.24(7%)

Brazil$2.47 (69%)

Mexico$0.55(15%)

eCommerce Distribution in Latin America, 2000 & 2004 (in Billions)

2004


TOTAL = $3.58

TOTAL = $66.50

Argentina$6.65(10%)

Rest ofRegion

$6.65(10%)

Brazil$39.90 (60%)

Mexico$13.30(20%)

2000

2001

2002

2003

2004

$6.80

$13.40

$29.60

$74.10

$188.80

Source: Forrester Research, 2000

Forrester: eCommerce in Latin America, 2000–2004 (in Billions)


58


B. B2C eCommerce B2C e-commerce in Latin America has been hobbled by what EIU’sebusinessforum.com has labeled “transactional dysfunction”: in order tocomplete a purchase on a local site, Latin American consumers must clickan average of 11.4 pages (by contrast, the US average is 5.5). As a result,the abandonment rate of cybershopping carts is high: 92%, according toebusinessforum.com.

As B2C e-commerce matures in Latin America, the likelihood is that mostmarkets will see an outgrowth of firms that craft buying opportunities inline with local preferences and shopping habits (in terms of merchandise aswell as payment methods), rather than attempting to imitate successful USmodels, as was the case in the early period of Latin American B2C e-commerce. Beyond successful marketing and advertising campaigns,improving the security of online transaction environments, betterdisclosing of privacy policies and offering on- and offline customer servicewill be key factors in the effort to attract more consumers to B2C sites andhave them return as repeat buyers. A high level of service and efficiency isespecially important for the elite who make up the majority of the existingonline consumer segment, as they are used to receiving preferentialtreatment from bricks-and-mortar merchants.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

$1.45

$3.33

$6.42

$10.90

Source: International Data Corp. (IDC), 2000

IDC: eCommerce in Latin America, 2000–2003 (in Billions)

2000

2001

2002

2003

$1.10

$2.37

$4.48

$7.63

Note: Includes revenues from the sale of goods and services among businesses and to final consumers. Source: Morgan Stanley Dean Witter, 2000

Morgan Stanley: eCommerce in Latin America, 2000–2003 (in Billions)


59


As with internet usage, increasing e-commerce revenues depends in largepart on getting more Latin Americans online and giving them reasons tocome back as regular shoppers. Greater teledensity, higher PC and creditcard penetration rates and lower internet access charges are central to thiseffort.

Although consumer e-commerce sites tend to garner more publicity thanB2B marketplaces, the B2C segment actually represents a small andshrinking share of Latin America’s total e-commerce revenues. As thesector consolidates over the next few years, its share of total revenues willshrink from 20% in 2000 to 12% in 2004.

eMarketer’s B2C e-commerce estimates fall toward the middle of the packof comparative estimates. In broadening our definition of an active internetuser to include the population aged 14 and above, we have added aconsiderable population of tech-savvy teens to the audience of potentialonline consumers.

A study done by Boston Consulting Group (BCG) and Visa highlights adramatic increase in popularity of consumer-to-consumer (C2C) auctions.The survey predicts that C2C auctions will produce revenues totaling $192million in 2000, making them the largest consumer category. Auction siteshave the advantage of offering consumers a wide variety of merchandisewithout requiring sophisticated in-house delivery and fulfillment systems.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$0.73 (20.2%)

$1.76 (18.2%)

$3.31 (16.0%)

$5.49 (14.0%)

$8.11 (12.2%)


B2C eCommerce in Latin America, 2000–2004(in Billions and as a % of Total Latin AmericaneCommerce )

B2C eCommerce in Latin America, 2000–2004 (in Billions)Country 2000 2001 2002 2003 2004

Argentina $0.05 $0.11 $0.30 $0.43 $0.73

Brazil $0.52 $1.24 $2.15 $3.64 $5.19

Mexico $0.11 $0.28 $0.62 $0.97 $1.46

Rest of Region $0.05 $0.12 $0.25 $0.46 $0.73

TOTAL $0.73 $1.76 $3.31 $5.49 $8.11

Figures may not add up precisely due to rounding. Source: eMarketer, 2000


60


Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$0.48

$0.95

$2.10

$5.25

$13.40


Forrester: B2C eCommerce in Latin America, 2000–2004 (in Billions)

2000

2001

2002

2003

2004

$0.54

$1.16

$2.19

$3.74

$5.80


Jupiter: B2C eCommerce in Latin America, 2000–2004 (in Billions)

2000

2001

2002

2003

$1.10

$2.56

$4.94

$8.28


IDC: B2C eCommerce in Latin America, 2000–2003 (in Billions)

2000

2001

2002

2003

$0.37

$0.79

$1.46

$2.13


Morgan Stanley: B2C eCommerce in Latin America, 2000–2003 (in Billions)


61


BCG/Visa estimates retail e-commerce will reach $580 million in 2000. Thesame study also forecasts increasing concentration among online retailers.Currently, the ten leading sites in each major Latin American marketaccount for 57% to 80% of the total market. By contrast, the top ten sites inthe United States account for only 38% of the overall online consumermarket. As a result, until the online consumer market in Latin Americagrows, many of the approximately 1,300 online retailers will be hard-pressed to survive. Smaller sites, in particular, are ill equipped financiallyto bear the tremendous costs of building an online brand.

Disposable IncomeAccording to the Strategy Research Corporation (SRC), the buying power ofthe 18 largest Latin American markets, which are home to approximately120 million households, will total $1.3 trillion in 2000, up from $1.23trillion in 1999. SRC predicts that buying power will grow by 9% in Brazil,7% in Mexico and 3% in Argentina. SRC forecasts indicate that averagebuying power per household will reach $20,703 in Argentina and $18,364in Mexico.

These figures are indications of economic recovery across the region,although given Latin America’s highly unequal distribution of income, thepositive effects of the region-wide economic rebound will undoubtedly notbe felt evenly in most countries. In addition, in order for this trend tocontinue, the region must continue to display low indices of inflation,increasing exports and an overall climate of stability. Ongoing recessionsin parts of the region may lead some consumers to conserve theirdisposable income.

Definitions of socio-economic level differ from country to country inLatin America owing to disparities in the cost of goods and services, thedegree of accuracy in the reporting of household income to governmentauthorities and survey research firms and variances in year-to-yearhousehold income.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

C2C Auctions

Computer Hardware/Software

Financial Services

Books/Music/Videos

$192.0

$72.0

$61.5

$59.0

Source: Boston Consulting Group/Visa International, 2000

BCG/Visa: Top B2C Categories in Latin America, 2000 (in Millions)


62


As a result, national marketing associations in each country have createdtheir own country-specific definitions based on point-scoring schemes.What the definitions share is a focus on educational achievement,occupation and ownership of consumer goods. Furthermore, all divide thepopulation into A, B, C and D strata, although some associations furtherdivide the C stratum (middle class) into C1, C2 and C3 designations, whileothers include an E stratum as the lowest socio-economic level.

In Argentina, the definition is based on the occupation and level ofeducation attained by the main income earner in each household, thepossession of consumer goods and housing factors (style, size, materials,appearance). The Brazilian definition looks at the head of household’seducational achievements as well as the number of consumer goods (TVs,vacuums, washing machines, radios), domestic helpers and bathrooms ineach household.

In Mexico, the point-scoring scheme is based on the educationalachievement and occupation of the head of household, the ownership ofconsumer goods, the number of light bulbs and rooms in the home(excluding bathrooms) and the number of domestic helpers.

Credit Card Issuance and TechnologyThe generally low level of credit card ownership and use in the region is awell-known impediment to the growth of B2C e-commerce in LatinAmerica. Compared to the United States, where there are 1.8 cards perperson, only the wealthy in Latin America hold credit cards to anysignificant degree. Among upper-income citizens (those in the A, B and thetop half of the C strata), penetration rates are 37% in Brazil, 94% inMexico, 96% in Argentinaand 41% in Chile. Throughout the population asa whole, however, the proportion of people with credit cards issubstantially lower.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Argentina

Brazil

Mexico

27%

18%

22%


Morgan Stanley: Population with Credit Cards in Argentina, Brazil, and Mexico, 2000


63


A legacy of economic instability is partly to blame for the lack of a creditcard culture in Latin America. During the 1980s and 1990s, hyperinflationand correspondingly high interest rates led both merchants and buyers tospurn credit cards in favor of cash or checks (which consumers continue touse as a form of credit to pay merchants in monthly installments). Eventhough most economies in the region have stabilized, consumers still preferto pay for their purchases in cash or by check.

As a result, online merchants continue to offer consumers a variety ofpayment options. Among the most popular are deposits to a merchant’sbank account, direct debit from a customer’s account and payment at abricks-and-mortar retailer. All of these options add time, expense andfriction to the online transaction process.

Debit cards have experienced dramatic growth rates in the past three yearsin Argentina, Brazil and Mexico, even while the number of credit cardsissued has grown more slowly (or even contracted, as in the case ofMexico).

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Cash (or COD)45%

Brick–and–Mortar

Credit Card39%

Check or Debit Card15%

ElectronicPurse

1%

D'Alessio/Harris: Preferred Forms of Payment in Latin America

Online

Source: D'Alessio/Harris, e–Conomia Digital, cited in Tendencias, Sept. 2000

Cash (or COD)54%

Bank Transfer18%

Credit Card39%


64


In theory, using chip-based “smart cards” and other prepaid devices insteadof money and magnetic-strip credit cards to pay for goods and serviceswould not only be more convenient than depositing a pocketful of coins atthe local newsstand, but could also revolutionize B2C e-commerce byenabling consumers to make micro-payments online. Other advantages ofmoving to a chip-based system include reduced fraud, lower processingcosts and additional card features.

In reality, most countries, including those in Latin America, have beenslow to adopt e-money solutions. The principal drawback associated withconverting to smart cards is the cost. For example, the trade journal CardTechnology estimates that traditional magnetic-strip cards cost $0.50 to$0.75 each, while chip-based cards $2 to $5 each. Additional related costsinclude upgrading 15 million POS (point-of-sale) terminals and nearly800,000 automated teller machines worldwide to read the chip cards.

In Latin America, Brazil and Mexico are the leaders in experimentingwith smart-card technology. They expect to replace magnetic-strip debitand credit cards with smart cards over the next five years. Brazil, inparticular, has a considerable recent history of credit card fraud, and cardissuers are therefore well motivated to switch to a more secure technology,even when this involves up-front costs.

Recent data indicate that investments in more secure credit cardtechnology would be worthwhile, particularly for Latin America’s nascentonline consumer market. According to InfoAmericas, two-thirds of creditcard holders are reluctant to use their cards for online purchases on LatinAmerican sites. This reluctance is justified, as estimates put the proportionof web sites in Latin America that prompt for credit card numbers inunsecured environments at 70%.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

57%

41%

16%

0%

Website will deliberately misuse card

Personal information will be used for spamming

Website will be hacked

Lack of paper receipt will prevent dispute resolutions

Website will lose order or never ship

Website will overcharge

Website will make duplicate charges

27%

22%

Source: e–Conomia Digital, cited in Tendencias, Feb. 2000

e-Conomia: Latin American Consumer Fears about Online Credit Card Use

66%


65


eCommerce firms face other hurdles beyond the region’s weak (albeitimproving) telecommunications infrastructure and low credit cardpenetration rates. According to InfoAmericas, online merchants in LatinAmerica allocate only 5% of their budgets to sales-related technology andsoftware. By comparison, they typically spend 60% or more of theirbudgets on marketing and promotion under the assumption that increasingtraffic is the easiest and quickest way to boost sales.

If consumers and businesses are averse to buying online, e-commercemarkets will be slow to develop. At the same time, with credit, especiallyfor start-up ventures, expensive and difficult to access across LatinAmerica, InfoAmericas has found that many online merchants are hesitantto invest in software technology that is unlikely to pay for itself in the shortterm. Yet, by failing to invest in front- and back-end technology, theexpected e-commerce market may not emerge, and if it does indeedexplode as predicted, online merchants may not have the capacity tohandle the increase in volume.

“Companies that have a combination of innovation,response to consumer needs and a clear path toprofitability, will be in the game. Those that don’t,won’t.”– Charles Herington, President, America Online Latin America, in Red

Herring, December 2000

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Others

Peru

Chile

Venezuela

Colombia

Argentina

Mexico

Brazil

$5

$3

$3

$4

$7

$17

$22

$110

Source: InfoAmericas, 2000

InfoAmericas: Investment in eSales Technology and Software in Selected Latin American Countries, 1999 (in Millions)


66


The solution to the technology dilemma may lie in two forms of the still-nascent market for outsourcing services: ASPs and “insourcing.” The ASPmarket is in its infancy in Latin America, but given the high costsassociated with building proprietary software and technology solutions, theASP model may, over time, reach the level of penetration it has throughoutthe Europe and the United States, particularly as broadband access becomesmore widespread. IDC predicts that the ASP market in Latin America willgrow to $418 million by 2004.

In the meantime, Latin American banks, which have already investedheavily in automated systems, are well-positioned to insource thetransaction services that e-commerce merchants and digital exchangesmay require. In essence, by providing the hardware, software as well aspersonnel and expertise for processing credit card and other transactions,banks serve as a channel for purchases made in digital marketplaces.Independent payment processors are also emerging to meet demand in thissector.

Foreign Online PurchasingIn a recent white paper, IDC expressed concern that few US companies havetaken steps to “globalize” their web sites for foreign visitors, such asallowing a choice of language, special regional sections, accepting localcurrency and offering local customer service and support representatives.This critique is especially relevant given that a majority of Latin Americanbuyers shop at foreign, and specifically US, e-commerce sites. Nevertheless,Latin American firms should also bear IDC’s concerns in mind. Those firmsoperating on a region-wide basis must pay attention to performance issues,maintenance and content integrity in order to thrive in all markets.

“The best globalized site doesn’t hint that it hasbeen translated or localized at all. Rather, it’stransparent with the look and feel as if it wereoriginally written and designed in and for thetarget language and culture.”– Barry Parr, Director, Internet and eCommerce Strategies Research

program, IDC

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


67


With the continued exception of Brazil, online buyers in Latin America stillshop predominantly at foreign sites. This trend is due in part to thecosmopolitan characteristics of the advanced internet users who shop overthe internet: they are likely to be the same people who travel to Miami for aweekend of shopping. It may also reflect a limited availability or a lack ofvariety of popular products–typically, electronics goods, computer softwareand hardware, books, music and videos–at local sites. Thus, the wealthy“early adopters” who tend to be pioneering online consumers often opt tobuy abroad, despite the considerable added expense and logisticalannoyances this may involve.

By contrast, consumers in the United States overwhelmingly shop atdomestic sites, which is understandable given that the US is home to amajority of consumer commerce sites. On the other hand, an InfoAmericasstudy found that the overall average for those favoring domestic andforeign sites in Europe was the same 41%/59% split as in Latin America.Nevertheless, until Latin American shoppers shift their buying to domesticsites, and hence, make the internal Latin American market viable, thedevelopment of local websites and the diffusion of the internet to small andmedium-sized enterprises in Latin America may be stymied.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


68


On the other hand, BCG/Visa predicts that goods bought from US-based e-commerce sites and imported into Latin America will account for only 7%(or $40 million) of the overall B2C market in 2000. This prediction is basedon a finding that 86 of 108 well-known US sites do not ship to LatinAmerica (including even to Mexico).

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Argentina

Latin America (avg)

63%

59%

37%

41%

Chile

Brazil

75%

39%

25%

61%

Mexico

Colombia

60%

66%

40%

34%

Venezuela

Peru

77%

80%

23%

20%

Europe (avg)

US

59%

9%

41%

91%

InfoAmericas: Online Spending Going to Domestic and Foreign Sites in Selected Latin American Countries, US, and Europe, 2000

Domestic Foreign



69


C. B2B eCommerceThe high level of fragmentation in the supply chain in Latin Americameans that tremendous opportunities exist in the B2B segment of the e-commerce market. For that reason, eMarketer expects B2B e-commercerevenues to grow rapidly in the next few years, and gain an increasingshare of overall e-commerce revenues in the region.

Latin American firms have been slow to implement electronic datainterchange (EDI) and enterprise resource planning (ERP) software largelybecause of the tremendous start-up costs involved. Bringing procurementand transaction activities online will also involve considerable costs, andthe investment in the requisite telecommunications and computertechnology will initially be burdensome, particularly for small- andmedium-sized enterprises (SMEs), but the savings from lower purchasingprices, transaction costs and inventory levels could dramatically increaseoverall operating margins.

B2B e-commerce constitutes the overwhelming majority of onlinecommerce revenues in Latin America: 79.76% in 2000. Its share willincrease to 87.80% in 2004, as marketplaces and exchanges mature, and asmore businesses and governments move to online procurement.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$2.85 (79.8%)

$7.87 (81.8%)

$17.39 (84.0%)

$33.63 (86.0%)

$58.39 (87.8%)


B2B eCommerce, 2000–2004 (in Billions and as a % ofTotal Latin American eCommerce)

B2B eCommerce in Latin America, 2000–2004 (in Billions)Country 2000 2001 2002 2003 2004

Argentina $0.27 $0.75 $1.98 $3.48 $5.92

Brazil $1.95 $5.30 $10.48 $20.62 $34.72

Mexico $0.44 $1.26 $3.52 $6.47 $11.84

Rest of Region $0.19 $0.55 $1.41 $3.06 $5.92

Total $2.85 $7.87 $17.39 $33.63 $58.39

Note: Figures may not add up precisely due to rounding. Source: eMarketer, 2000


70


The interesting fact about Forrester’s projections is by 2002, they forecasthigher total B2B e-commerce revenues for Mexico than for all of the rest ofLatin America, including Brazil. This prediction runs contrary to nearly allother forecasts, but can perhaps be attributed to Mexico’s proximity to theUnited States and the degree to which its assembly operations are closelylinked to global supply chains.

In addition, Forrester sees hypergrowth occurring in Mexico in 2003, oneyear before Brazil, and several years prior to the rest of Latin America. Inthis context, Computer Economics is clearly an outlier whose predictionsfar exceed even the most optimistic estimates.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2001

2002

2003

2004

$3.50

$14.20

$31.80

$61.10

Note: Figures do not include Mexico.Source: Goldman Sachs, 2000

Goldman Sachs: B2B eCommerce in Latin America, 2001–2004 (in Billions)

2000

2001

2002

2003

2004

$6.34

$12.40

$27.50

$68.77

$175.43


Forrester: B2B eCommerce in Latin America, 2000–2004 (in Billions)

2000

2001

2002

2003

$360.85

$601.67

$833.92

$1,161.28

Source: Computer Economics, 2000

Computer Economics: B2B eCommerce in Latin America, 2000–2003 (in Billions)


71


Logistics and Delivery SystemsBeyond the low indices of internet access and credit card penetration inLatin America, other impediments to the growth of e-commerce remain,particularly the region’s lack of economic integration and firms’ limitedinvestment in online sales technology and software. In turn, these factorshave a direct effect on logistics in the region as well as costs to both e-commerce firms and end users.

Even though import barriers across Latin America are coming down,suppliers from the United States, Europe and Asia are winning marketshare, largely because Latin Americans prefer to develop their exporteconomies with an eye towards foreign markets, where purchasing powerand demand for locally produced goods are greater. Among Latin Americanmarkets, only Mercosur is integrated regionally, and the trend in the pasttwo years has been toward declining intra-regional trade.

The telling statistic about Latin America’s lack of economic integrationcomes from an InfoAmericas study: only 7% of the revenue generated bythe top 100 Latin American firms comes from outside their home markets.This stands in stark contrast to the revenue mix of the global Fortune 500firms, 35% of which comes from foreign markets.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

$0.74

$1.59

$3.01

$5.50


Morgan Stanley: B2B eCommerce in Latin America, 2000–2003 (in Billions)

2000

2001

2002

2003

$0.35

$0.77

$1.48

$2.62


IDC: B2B eCommerce in Latin America, 2000–2003 (in Billions)


72


“E-commerce is currently a nationalmarketplace–92% of orders are shipped within thecountry of purchase. But with one in threecompanies predicting an increase in export sales,this is changing.”– Etienne de Longvilliers, Global E-Business Director, DHL Worldwide

Express

The region’s lack of economic integration has had a direct impact on e-commerce firms, many of whose original business plans and revenueprojections were based on achieving sales volumes dependent on regional(as opposed to local) coverage. According to InfoAmericas, as a prerequisitefor obtaining financing, venture capital firms initially demanded that e-commerce firms set sales volumes reachable only by expanding to aregional coverage.

Yet, brands and media also tend to be national rather than regional.Moreover, trade restrictions and logistics hurdles vary from country tocountry, even within Mercosur, so firms must craft unique solutions foreach, which, in turn, inhibits economies of scale. Not surprisingly, e-commerce firms have struggled to create and successfully sell brandswith intra-regional appeal and as a result, many are now retrenching andfocusing on building their companies one individual country market at atime. In this environment, firms with alternative revenue sources, such asBrazil’s Globo media empire and Spain’s Telefonica, which, in addition toits Terra Networks portal and ISP arm, is a regional powerhouse in fixed-line and cellular telephony, are best situated to fund expansion efforts andsurvive fluctuations in the region’s internet market.

Fulfillment also remains a global concern for e-commerce firms. TheDHL study found that 25% of companies have yet to define their e-commerce fulfillment policies. The average delivery time across the worldis currently four days, and not surprisingly, the DHL survey also revealedthat 20% of all e-commerce deliveries arrive late when taking into accountcustomers’ lead-time expectations. In Latin America, where the logisticsinfrastructure remains generally underdeveloped, recent estimates have putthe average delivery time for goods ordered on the internet at five days.

Overall, the companies surveyed regarded fulfillment-related matters(including customs and tax issues) as some of the leading barriers to thedevelopment of e-commerce around the world. Furthermore,14% ofcompanies surveyed even admitted that they did know what effect thevagaries of customs policies in different countries would have on theirexports.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


73


The BCG/Visa study confirmed that customer service responsiveness andon-time delivery performance of most Latin American consumer e-commerce sites are sorely in need of improvement. For example, BCG andVisa sent test e-mail inquiries to 118 sites and received responses from only66. The study also found that the level of telephone customer support isgenerally poor, and that many sites lack phone support altogether. Inaddition, 42% of goods ordered online during a “mystery shoppingexperiment” arrived late.

Clearing customs in most Latin American countries is a complicated andoften expensive process that requires an experienced hand. Long delays atcustoms, high port and transport costs and fragile infrastructure are thenorm in Latin America. Moreover, Latin Americans widely perceive thatcustoms officials are dishonest and often deliberately inefficient.

According to a forecast by InfoAmericas, Latin American e-commercefirms in general and B2C firms in particular are frustrated by the highprices, slow service and limited coverage of international logistics firms.InfoAmericas estimates that in Mexico, Colombia, Venezuela, Chile andArgentina, 60-80% of B2C purchases are imported from the United States.Estimates put the average purchase at approximately $70. However,additional logistics costs can often bring the final bill to more than doublethat amount (as much as $150).

The result is that Latin-based B2C e-commerce firms generally cannotchallenge traditional distribution channels. On the other hand, the B2Bmarket, where the average order is an estimated $1,500, offers greaterpossibilities, not least because buyers deal directly with suppliers ratherthan several levels of a disorganized supply chain. In addition, fixedlogistics costs have a smaller impact on the final price of any goodsordered.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

41%

26%

Web Security

Ease of Payment

Order Fulfillment

Language

Route to Market/Channel Conflict

Customs/Tax Issues

39%

35%

Source: DHL Worldwide Express, 2000

DHL Worldwide: Global eCommerce Barriers Cited by Companies Worldwide, 2000

69%

47%


74


Furthermore, couriers require an average of about two visits to completehome delivery versus 1.2 visits for business deliveries. As a result,delivering goods in the B2C market may not be a priority for internationalcourier firms, but rather, something of an encumbrance that they may beforced to bear.

Despite the considerable impediments, some Latin-based firms areattempting to enter the B2C logistics market. For example, Lanexpress, thecourier division of Chilean airline Lanchile, recently launched a shoppingportal that provides Latin American consumers with a mailing address inMiami. Consumers can then purchase products from US e-tailers andcatalog merchants and have them shipped to Latin America by Lanexpressvia their Miami address. The service promises 48-hour door-to-doordelivery from Miami to Latin America.

Product returns represent an additional hurdle. According toInfoAmericas, approximately 25% of online product orders originating inLatin America contain data entry errors–such as an incorrect address orproduct selection–that can compromise the order. InfoAmericas attributesthe high percentage of errors to Latin American purchasing managers whobuy from English-language web sites but whose first language is Spanishor Portuguese. However, once the error has been made, regardless of thecause, who is responsible for return shipping and handling and the cross-border transactions? So far, there is little consensus on which party shouldbear the responsibility for product returns.

Finally, the coverage of major international courier firms is largelylimited to major cities throughout the region. Although Latin America ishighly urbanized, and large cities with over one million inhabitants doaccount for a sizable portion of the region’s overall population, there aremany smaller cities with 200,000 or more residents with no alternativeother than smaller and often more unreliable regional and local couriers.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

InfoAmericas: Delivery Coverage of UPS and DHL in Selected Latin American Countries, 2000 Cities UPS DHL

Argentina 5 locations 12 locations

Brazil 8 locations 21 locations

Chile 3 locations 7 locations

Mexico 18 locations Approx. 80 locations



75


D. mCommerceMobile commerce (m-commerce) is a nascent market with forecasts forsubstantial growth, as the following estimates from Jupiter Researchindicate.

However, apart from uncertainty about consumer acceptance of this newform of shopping, it is unclear whether mobile revenues will represent newdollars spent or sales cannibalized from the PC-based internet. Of the $22.2billion in worldwide m-commerce revenues forecast for 2005, Jupiterpredicts that $10.8 billion will come from shopping, $8.0 billion from paidcontent and $3.3 billion from advertising.

Moreover, Jupiter’s projections indicate that the growth of m-commercein Latin America will not begin to truly take effect for several years. Evenin 2005, Jupiter predicts that m-commerce spending in Latin America willreach only $500 million, the smallest total of any region in the world.

Estimates from Ovum, which, unlike Jupiter Research, include the purchaseof physical goods, services and paid-for information in both the businessand consumer segments, are somewhat higher, reaching $5.65 billion in2004. Given Jupiter’s modest predictions for m-commerce in LatinAmerica, the likelihood is that business-related purchases account for alarge portion of Ovum’s much higher estimates.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Jupiter: Worldwide Mobile Commerce Revenues, 2000–2005 (in Billions)Region 2000 2001 2002 2003 2004 2005

Asia $0.4 $1.3 $2.6 $5.0 $7.4 $9.4

North America $0.0 $0.1 $0.2 $0.7 $1.8 $3.5

Western Europe $0.0 $0.1 $0.5 $1.7 $4.6 $7.8

Latin America $0.0 $0.0 $0.0 $0.1 $0.2 $0.5

Rest of World $0.0 $0.0 $0.1 $0.2 $0.4 $1.0

TOTAL $0.4 $1.5 $3.4 $7.7 $14.4 $22.2


Ovum: Worldwide Mobile Commerce Revenues, 2000–2004 (in Billions)Region 2000 2001 2002 2003 2004

North America $0.78 $3.82 $8.76 $19.22 $32.41

Western Europe $1.18 $4.91 $14.05 $30.08 $51.12

Asia/Pacific Rim $1.55 $5.98 $13.45 $28.06 $46.54

Latin America $0.02 $0.26 $0.89 $2.92 $5.65

Africa/Middle East $0.02 $0.21 $0.72 $2.30 $3.65

TOTAL $3.55 $15.18 $37.87 $82.58 $139.37

Source: Ovum, 2000


76


VMethodology: The eMarketer Difference

I Overview



IV eCommerce

V eAdvertising 77

VI eFinance





Index of Charts


77



78


Total Latin American advertising expenditures, including both on- andoffline spending, will rise at a modest pace over the next several years,increasing from $29.1 in 2000 to $34.7 in 2004. Latin America’s share ofworldwide advertising spending will remain virtually unchanged, however,hovering at just over 6% of global expenditures.

Zenith Media predicts a similar rate of growth in Latin America, althoughits estimates exclude online advertising. Television advertising representsthe vast majority of all offline ad expenditures in Latin America. Zenithexpects worldwide internet advertising spending to exceed $7 billion in2000, and then grow 37% and 29% in 2001 and 2002, respectively.

Latin American nations figure prominently in Zenith Media’s projectionsfor advertising spending in 2000. Brazil is projected to have the seventh-largest advertising expenditures, ahead of Spain, Canada and Australia.Spending in Mexico and Argentina combined are roughly equal to that ofBrazil.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

$24.2 (7.3%)

$26.6 (7.5%)

$28.8 (7.9%)

$31.2 (7.9%)

*Includes print, TV, radio, movie, and outdoor advertising but does not include internet advertisingSource: Zenith Media, 2000

Zenith Media: Latin American Advertising Expenditure,* 2000-2003 (in Billions and as % of Worldwide Total)

$29.1 (6.3%)

$30.2 (6.3%)

$31.5 (6.3%)

$33.1 (6.4%)

2000

2001

2002

2003

2004 $34.7 (6.4%)


Total Latin American On- and Offline Advertising Expenditure, 2000–2004 (in Billions and as % of Total Worldwide Advertising Expenditure)


79


Latin American online ad spending remains well below North Americanand European levels. However, spending will grow briskly over the nextfew years as the number of active internet users and the average time spentonline increase.

Spending will increase ten-fold between 2000 and 2004, rising from$162.8 million to $1.64 billion. Latin America represented just over 2% ofglobal internet advertising expenditures in 2000, but its share of total non-US spending is considerably higher: nearly 10% in 2000 and increasing toalmost 14% by 2004. Latin America’s share of total online advertisingexpenditures will more than double between 2000 and 2004, eventuallyclimbing to 5% of the global total.

A major challenge for online advertisers will be to garner the attention ofLatin America’s large television audience. Television is by far the mostpopular medium in the region, and Latin Americans are more likely to payattention to television as opposed to internet ads by a margin of nearly sixto one according to a study produced by the market research firm TGILatina.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

$162.8

$304.0

$608.5

$1,044.8

2000

2001

2002

2003

2004 $1,640.6


Latin American Online Advertising Expenditure, 2000–2004 (in Millions)

Brazil

Mexico

Argentina

Colombia

$6.9

$4.3

$2.7

$2.6

Source: Zenith Media, 2000

Zenith Media: Top Latin American Countries byAdvertising Spending, 2000 (in Billions)


80


Other research firms also predict that Latin American internet advertisingexpenditures will grow rapidly over the next four years. ForresterResearch’s estimates are roughly comparable eMarketer’s, starting at $121million in 2000 and ramping up to $1.65 billion by 2004. Morgan Stanleyforesees expenditures reaching $1.21 billion by 2003. Jupiter Researchpredicts that online ad spending will grow at a slightly more modest rate,with expenditures reaching $888 million by 2004. Further, Jupiter expectsthat overall ad spending dedicated to the internet will represent a fractionof total ad spending in Latin America: 1% through 2002 and increasing to4% by 2005.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Comparative Estimates: Latin American Online Advertising Expenditure, 2000–2004 (in millions)

2000 2001 2002 2003 2004

eMarketer $162.8 $304.0 $608.5 $1,044.8 $1,640.6

Morgan Stanley Dean Witter $130 $253 $532 $1,210 –

Jupiter Research $127 $240 $402 $628 $888

Forrester Research $121 $260 $517 $949 $1,646


2000

2000

2.4%

2.1%

9.6%

9.9%

2000

2000

4.0%

3.2%

12.1%

11.0%

2000

5.0%13.9%

as % of Non-US Dollars as % of Worldwide Total


Latin American Online Advertising Expenditure, 2000–2004 (as a % of Worldwide Total and Non-US Worldwide Ad Expenditure)


81


Average CPM RatesData on cost-per-thousand (CPM) rates in Latin America are scarce. JupiterResearch estimates Chile to have some of the region’s highest rates, withrun-of-site CPMs in the range of $40-$50. In Brazil, which has the greatestnumber of sites and the highest traffic volumes in the region, Jupiter foundCPMs to be considerably lower, in the range of $15-$25.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

$121

$260

$517

$949

2000

2001

2002

2003

2004 $1,646


Forrester: Latin American Online Advertising Expenditure, 2000–2004 (in Millions)

$127

$240

$402

$628

2000

2001

2002

2003

2004 $888


Jupiter: Latin American Online Advertising Expenditure, 2000–2004 (in Millions)

2000

2001

2002

2003

$130

$253

$532

$1,210


Morgan Stanley: Latin American Online Advertising Expenditure, 2000–2003 (in Millions)


82


Click-Through RatesInformation on click-through rates (CTRs) in Latin America is likewiselimited. According to TGI Latina, 45% of internet users surveyed acrossLatin America had clicked on one or more banner ads in the 30 days priorto the survey. The 55% of Latin Americans who ignored banner adsaltogether is consistent with the percentages estimated by eMarketer andother research firms.

Not surprisingly, the TGI Latina study found that clicking on adsincreases as a function of time spent online, using the logic that the moretime users spend online, the more pages they will view and consequently,the more ads to which they will be exposed. Note that this is distinct fromCTRs, which most estimates put in the range of 0.5% worldwide.

Wireless AdvertisingAccording to Ovum, Latin America will lag behind all other regions of theworld in mobile advertising spending through 2004. Even in 2004, whenmobile advertising spending in Latin America is predicted to reach its peak,it will represent less then 2% of total worldwide expenditures.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

43%

47%

55%

56%

Less than 5 Hrs

5 to 9 Hrs

10 to 19 Hrs

20 to 29 Hrs

30+ Hrs 64%


TGI Latina: Latin American Internet Users Clicking on Ads, 2000 (by Time Online in Past 30 Days)

Asia/Pacific Rim$3,086 (29.5%)

Europe$3,882 (37.1%)

Total = $10,474

Latin America$190 (1.8%)

North America$3,069 (29.3%)

Middle East/Africa$247 (2.4%)

Note: May not add up to 100% due to rounding.Source: Ovum, 2000

Ovum: Worldwide Mobile Advertising Expenditure, 2004 (in millions)

VI

Methodology: The eMarketer Difference

I Overview



IV eCommerce

V eAdvertising

VI eFinance 83

A. eBanking 84

B. eInvesting 87

C. Wireless Financial Services 88





Index of Charts


83



84


Latin America’s banking market is currently in the midst of a wave ofconsolidation. As governments place state-run banks up for sale, leadinglocal and multinational financial institutions are seizing the opportunity toextend their reach and customer bases. In turn, the consolidation processmay make small- and mid-sized banks, which lack both the capital andcheap financing necessary to expand, attractive acquisition targets.

The challenge that banks across Latin America face is their smallcustomer base. Among the wealthy, bank account penetration rates arehigh. However, the wealthy are a distinct minority in the region, andamong the majority of people, most of whom earn far less than $15,000 peryear, account penetration rates do not top 20%. Thus, although onlinebanking offers financial institutions the long-term potential of costsavings, banks will most likely derive revenues from offering value-addedservice and a wealth of banking products (from mortgages to financialplanning to equity trading) to the top 5-10% of their clientele.

A. eBanking

Users and AccountsBrazil’s state-run Banco do Brasil (BB) has been moving aggressively tosign up its customers for the bank’s online transaction services. Figuresreleased by BB indicate that initial adoption rates of online bankingservices have been highest among customers in the Federal District, whichincludes Brasilia, the national capital, followed by customers in São Paulostate, the country’s financial center, and Rio de Janeiro state, home to thenation’s second-largest city.

Citibank, which has a strong presence in Latin America, particularlyamong high-income and business customers, has released internal figuresthat indicate an 87% penetration rate for its online banking services amongthe institution’s corporate banking clients. The bank registers 20 milliononline transactions per month.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


85


TransactionsHewlett-Packard has estimated that 90% of Latin American banks have aninternet presence, but only 40% possess the technology required to offeronline transaction services. Brazil, Mexico and Argentina are the leaders inonline banking in the region, followed by Colombia, Venezuela and Chile.

In a region where the postal systems of many countries are neither securenor dependable enough to carry monthly bill payments (even checks), thepotential of the online consumer banking market is vast. Across LatinAmerica, consumers lose hours waiting in lines to pay utility, credit cardand other bills at banks or by going to branches of each individual utilitycompany. Customers stand to gain time by using online banking, whilebanks stand to save considerably on transaction costs.

Institutional Investor magazine estimates that the cost of delivering bankservice through the internet is drastically lower than other deliverychannels: $0.10 per transaction. By contrast, transactions at ATMs andtellers cost $0.60 and $1.53, respectively. InfoAmericas estimates thatinternet transactions cost less than three cents, while ATM and in-branchtransactions cost $0.50 and $1.30. Research by TowerGroup and UBSWarburg Dillon Read puts the average cost of web-only banking evenlower–$0.01–and branch-based transactions much higher: $4.05.

Brazil’s Bradesco Bank has been particularly successful in moving itscustomers to the web. Recent data indicate that Bradesco has expanded itscustomer base by 65% over the past two years, while increasing the numberof branches by only 4%. Much of the new clientele has been handled byelectronic banking (both internet and call centers).

According to the Yankee Group, Bancolombia initiated limited internetbanking in 1996, and by the end of 1999, 3% of all of its transactions wereweb-based. Conavi (Corporación Nacional de Ahorro y Vivienda),Colombia’s other leading e-bank, is in the final stages of launching itsSecure Electronic Transaction (SET) protocol-based bill payment system.

Growth Drivers and Barriers

1. Technology PenetrationA study of 42 financial institutions by the Argentine research firm Prince &Cooke has found that approximately 20% of banks have implemented aCustomer Relationship Management solution, while an additional 40%plan to do so in the upcoming year. 90.5% of banks possess datatransmission services, with fiber optics being the most commonly usedtechnology. Finally, the study revealed that all banks have internetconnections, of which 78% are dedicated lines.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


86


2. Availability of Products and ServicesSome Latin American banks are explicitly targeting the underserved micro-and small-sized enterprise market. Chile’s state-owned Banco del Estado ispositioning itself to dominate these low-to-middle-income segments, whileleaving high-income individuals to institutions like Citibank, BankBostonand Banco de A. Edwards. Banco del Estado is trying to boost adoptionrates among its lower-income customers (many of whom lack access tocomputers or the internet) by making its web site available from internetcafes in the Kioskonet chain throughout the country.

Meanwhile, Brazil’s state-owned Banco do Brasil and Caixa EconÔmicaFederal already dominate the small and medium-sized enterprise marketand have been accused by private-sector banking consortia of crowdingprivate institutions out of the market.

3. Business Attitudes and BehaviorCommercial banks have a long way to go before they earn the trust (and,consequently, the deposits) of the consumer population. However, they dohave a tremendous advantage when dealing with businesses, largelybecause banks have succeeded in developing strong relationships withbusiness customers, particularly over the tense years of hyperinflation,when they proved their ability to respond quickly to changes in the region’seconomic conditions. Banks, which in many Latin American countries arehighly automated, have been integral links in local and regional supplychains and procurement systems.

4. Consumer Attitudes and BehaviorDespite the growth projected in wireless financial services and inmultichannel delivery of consumer banking services in general,TowerGroup research findings also indicate that bank branches will remainconsumers’ preferred channel. Branches currently account for an estimated80% of transaction volumes and 70% of all channel spending. Given thatonline customers continue to use traditional delivery channels, such asbranch banking, Latin American banks will continue to invest in these aswell as bolstering their online service offerings.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


87


B. eInvestingInvestments and the amount of funds raised dropped sharply across LatinAmerica in 1999 in the wake of the Asian and Russian financial crises andthe devaluation of the real. However, as the region’s economies stabilizedin 2000, investment activity rose considerably, particularly in the first halfof the year, with internet companies attracting much of venture capitalinvestors’ attention. Interest in Latin American internet start-ups slowed inthe second half of the year following the NASDAQ correction and theglobal crisis of faith in the technology sector.

“What you saw over a three-year period in the USwas compressed in six months in Latin America.”– Brian Kim, Director, Citicorp Venture Capital, in Red Herring, December

2000

Size of Investment MarketAccording to Goldman Sachs, the supply of Latin American stocks has beenshrinking steadily over the past few years, to the point that most local stockmarkets in Latin America have become unimportant for institutional andhigh-income personal investors. Closely linked to this trend is a rise in thenumber of Latin American companies participating in American DepositaryReceipts (ADR) programs. Since 1995, the number of Latin American ADRshas risen from 141 to 316, with Brazilian and Mexican companiesaccounting for nearly 60% of Latin regional ADR programs, followed byChile and Argentina. As a result, Goldman Sachs estimates that investorshave taken $43 billion out of Latin American stock markets since 1998.Moreover, Goldman Sachs projections suggest that trading in ADRs willnearly equal the trading volume in local stock markets in 2000. Only inChile does the capitalization of the local stock market still constitute asignificant percentage of GDP. In Argentina, Brazil and Mexico, the ratio ofmarket capitalization to GDP has been in steady decline since the early1990s.

In terms of asset allocation, international and global emerging marketfunds have risen steadily in capitalization and importance, while singlecountry and regional funds have been in a state of decline since the mid-1990s.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


88


News, Information and AdviceSites like Chile’s Finanzaspersonales, which targets 24- to 45-year-olds,allow users to apply for credit and insurance, as well as trade stocks andmutual funds. The leading sites also provide online personal finance toolssuch as investment banking analyst reports, price alarms, calculators,simulators, insurance and credit quotes, and news feeds that supply dailyfinancial news and information.

Consumer Attitudes and BehaviorA survey of six online brokerages by the Brazilian media firm, AgênciaEstado, revealed that men represent a staggering 90% of all online tradersin Brazil. This shows that even as the internet user base in Brazilapproaches gender parity, men retain a disproportionate degree of controlover online financial decisions. Online traders are further concentratedgeographically: more than 70% live in the southeast regions of the country,with 60% residing in the state of São Paulo alone.

C.Wireless Financial ServicesTowerGroup predicts that the use of wireless financial services will growprecipitously over the next five years, with 24.8 million users of wirelessfinancial content and transaction capabilities expected by 2005. For theregion’s banks, providing wireless delivery channels is part of an effort toretain the top 10-15% of high-income customers, who, according toTowerGroup findings, represent approximately 80% of banks’ profits. Atthe same time, banks are looking to cut costs, and moving customersonline, where the average cost per transaction is $0.32 (versus $1.20 in thebranch), is an effective way to increase operating margins.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

International

Global Emerging Markets

Regional

Country Funds

$710

$83

$49

$28

Source: Goldman Sachs, 2000

Goldman Sachs: Global Asset Allocation, 2000 (in Billions)


89


Latin America’s largest banks, some of them subsidiaries of foreignpowerhouses like Spain’s Banco Santander Central Hispano (BSCH) andBanco Bilbao Vizcaya Argentaria (BBVA) and others like Brazil’s Bradesco,Itaú and Unibanco, have been aggressively building partnerships withwireless service providers. Mobile stock trading and bill payment systemsare also in the works. Partnerships not only carry the benefit of access tothe wireless carriers’ growing subscriber bases but they also serve todemonstrate the banks’ technological competency to investors in bothLatin America and around the world.

Spending on the development, maintenance and delivery of wirelessfinancial services will rise commensurately, from $8.6 million in 2000 to$116.9 million in 2005. However, Latin America’s share of worldwidespending on wireless financial services will increase modestly, from 4% in2000 to 7% in 2005. According to TowerGroup estimates, North Americawill show the greatest increase in spending, outpacing current marketleaders Western Europe and Asia.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

TowerGroup: Projected Users of Wireless Financial Services, 2000 & 2005 (in Millions)Region 2000 2005

Asia/Pacific Rim 4.81 83.70

Western Europe 3.89 76.60

North America 0.45 35.00

E. Europe & former USSR 0.39 9.40

S. America/Caribbean 0.25 24.80

Africa/Middle East 0.00 1.10

Total 9.79 230.6

Note: Figures may not add up precisely due to rounding.Source: TowerGroup, 2000


90


Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Western Europe$88.1 (38%)

2000

Lat. America/Caribbean $8.6 (4%)

Rest of World$5.6 (2%)

Asia$71.2 (31%)

North America$56.6 (25%)

TowerGroup: Projected IT Spending on Wireless Financial Services Worldwide, 2000 & 2005 (in millions)

2005

Note: Year 2005 does not equal 100% due to rounding.Source: TowerGroup, 2000

W. Europe$583.1 (30%)

Asia$443.3 (23%)

North America$698.7 (36%)

Lat. America/Caribbean $116.9 (6%)

Rest of World$84.5 (4%)

VII


I Overview



IV eCommerce

V eAdvertising

VI eFinance

VII Country Reviews: Argentina 91

A. Overview 92


C. eCommerce 98

D. eAdvertising 109

E. eMobile 110




Index of Charts


91



92


A. Overview

With its highly literate population of 37 million people and itsrelatively high GDP per capita of $7,898, Argentina constitutes anattractive internet market. More than one-third of the country’spopulation resides in and around Buenos Aires, the nation’s capital andthe world’s tenth largest city. The average Argentine enjoys a relativelyhigh standard of living, particularly in comparison to neighboringcountries.

Argentina was among the first Latin American countries to privatize itstelecommunications market. The government granted a long period ofexclusivity to Telefonica de Argentina and Telecom Argentina, effectivelycreating a duopoly in place of the previous government monopoly. It thenintroduced limited competition in the local, long-distance andinternational calling services markets in November 1999. Full liberalizationof all areas of the basic telecommunications market is scheduled forNovember 2000. Argentina currently has one of the most moderntelecommunications networks in the region.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

QuickStats: Argentina, 2000Total Population (in Millions)1 36.9

Population 14+ (in Millions)2 27.7

Population Living in Urban Areas (1999)3 90%

Average GDP per Capita4 $7,898

PCs per 100 Inhabitants (1999)5 4.92

Main Telephone Lines per 100 Inhabitants (1999)5 20.11

Mobile Cellular Subscribers per 100 Inhabitants (1999)5 12.12

Internet Users (in Millions)2 1.0

Internet Users as % of Pop. 14+2 3.6%

Source: 1US Census Bureau, 2000; 2eMarketer, 2000; 3World Bank, 2000; 4International Monetary Fund (IMF), 2000; 5International TelecommunicationUnion (ITU), 2000; 7Morgan Stanley Dean Witter, 1999


93


The cost of telecommunications remains a hindrance to internet growth.According to the US Department of Commerce, as of April 2000, a basicphone line in Argentina cost approximately $25 to $30 per month, notincluding per-minute usage fees. The Argentine government has takenactive steps to boost internet usage. In 1999, it established special low-price telephone numbers for reduced-cost internet access, which has raisedthe average connection time from approximately 15 to 24 minutes. Whenthe entire telecommunications market is opened up to domestic and foreigncompanies, the ensuing competition is likely to drive call prices down,perhaps as much as 20-40%. The government has also cut in half theinterconnection rate, reducing the fee newcomers must pay incumbents foruse of their networks from 2.35 cents per minute to 1.1 cents per minute.According to Pyramid Research, these tariffs will decrease at a rate of 3%rate per quarter over the next two years.

Beyond its well-developed telecommunication network, Argentina hasthe highest rate of cable TV subscriptions in Latin America. According toMorgan Stanley Dean Witter, approximately 48% of Argentine householdshave cable subscriptions, and Argentina’s 5.16 million cable TV subscribersrepresent nearly 38% of all cable subscribers in Latin America. With thislevel of penetration, which rivals that of the US, Argentina is the onlycountry in Latin America truly poised to offer broadband internet accessover cable lines. However, according to the US Department of Commerce,availability of broadband services is still limited. The high cost ofbroadband service remains a factor. As of April 2000, cable modeminstallation fees were around $100 and two-way communications couldadd as much as $100 to monthly bills (on top of the approximately $40 permonth for basic cable service). In addition, cable operators need to upgradetheir networks to permit two-way and high-speed data transmission. Thecost of these upgrades is likely to prevent operators from offering loweraccess prices, which are necessary to boost demand for broadband services.

The domestic information technology industry is not well developed.Only fiber optic cable and related components are produced locally. Notsurprisingly, Argentina is a potentially lucrative market for informationtechnology equipment and services. US exports of computer andtelecommunications equipment to Argentina jumped 62% between May1999 and May 2000. The total market for computer hardware, software andservices, valued at $3.8 billion in 1999, is the third largest in Latin Americaafter Brazil and Mexico.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


94


The Argentine government is clearly a factor in the country’s internetmarket. In addition to its efforts to provide lower-cost telecommunicationsservices, and thus facilitate wider internet usage, the government is in theprocess of finalizing its [email protected] program, which willprovide internet access to low-income and remote communities atstate-sponsored “telecenters” throughout the country. In addition, itrecently announced plans to provide internet access for all public schools,with funding support from the Inter-American Development Bank.

Formerly extremely volatile, the nation’s currency is now stable afterbeing linked to the US dollar on a one-to-one basis. The stability ofArgentina’s economy depends considerably on the relative economichealth of Brazil, Argentina’s leading trading partner. The devaluation of theBrazilian real in 1999 sent shock waves through Argentina’s markets,causing a 3% contraction in Argentina’s GDP and a recession from whichthe country has yet to emerge. Any further instability in Brazil could havesimilar effects on the Argentine economy.

B. Internet Users and eDemographicseMarketer projects 1 million Argentine internet users for 2000, climbing to1.5 million in 2001. By 2004, 3.02 million Argentines will be activelyusing the internet.

The internet penetration rate will be 3.6% in 2000, which is one of thehighest rates in the region. The penetration rate will climb into the doubledigits by 2004, when it will reach 10.3%. Over the next few years,Argentina’s share of the region’s active internet users will decline from10.0% in 2000 to 7.4% in 2004. This decline can be attributed to faster andmore extensive growth in Brazil, Mexico and other countries across theregion.

Methodology

Overview



eCommerce

eAdvertising

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Argentina

Brazil

Mexico

Other Countries

Index of Charts

1.0 (3.6%)

1.5 (5.3%)

2.0 (7.1%)

2.5 (8.6%)

2000

2001

2002

2003

2004 3.0 (10.3%)


Internet Users in Argentina, 2000–2004 (in Millions and as a % of Population 14+)


95


eMarketer’s projections are largely in line with estimates from MorganStanley Dean Witter, Jupiter Research, IDC and Pyramid Research.Compared to eMarketer’s calculation of 1.00 million active internet users in2000, Pyramid Research forecasts a user base of 910,000, while MorganStanley and IDC estimate 1.07 users and Jupiter’s estimate puts the numberat 1.34 million. The Argentine research firm Prince & Cooke’s estimate for2000 is the highest, at 1.8 million.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2002

2004

2010

1.1

2.4

3.5

6.6


Morgan Stanley: Internet Users in Argentina, 2000–2010 (in Millions)

2000

2002

1.1

1.8


IDC: Internet Users in Argentina, 2000 & 2002 (in Millions)

2000

2002

2002

1.3

3.0

5.6


Jupiter: Internet Users in Argentina, 2000, 2002, & 2004 (in Millions)

2000

2002

2004

0.9

1.8

2.4

Source: Pyramid Research, 2000

Pyramid: Internet Users in Argentina, 2000, 2002, & 2004 (in Millions)


96


Demographic ProfileAccording to a study by Prince & Cooke, the average user in Argentina ismale, middle-class, college-educated, resides in the greater Buenos Airesmetropolitan region and has been using a computer for five years.

The Prince & Cooke study found that 57% of Argentine internet users aremale, and fully 68% live in and around the nation’s capital, home to nearlyone-third of the country’s population.

On average, men have been also using the internet for longer than women:78% of men have been users for more than one year, whereas thepercentage among women is only 69%.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

3.5

2.4

3.0

Jupiter Research

Morgan Stanley

IDC

Pyramid Research

eMarketer

3.0

2.4

1.8

1.8

2.0

1.3

1.1

1.1

0.9

1.0

Comparative Estimates: Internet Users in Argentina, 2000, 2002, & 2004 (in Millions)

200020022004


5.6

Female 43% Male 57%

Source: Prince & Cooke, 2000

Prince: Internet Users in Argentina, 2000 (by Gender)


97


Argentines in the 25-29 age bracket are the most experienced users–82%have been accessing the internet for more than one year–closely followedby users in the 30-39 and 19-24 segments. Users in the top threesocioeconomic strata are likewise the most experienced: 57% haveaccessing the internet for more than a year. Lower-middle-class users, whocomprise approximately 5% of the Argentine user population, are the leastexperienced: 50% have been the internet for more than a year. However, incomparison to other countries in the region, this figure is actually quitefavorable, and is a telling indicator of the greater maturity of the Argentineinternet market.

Argentina’s internet users are very heavily concentrated in the nation’s topthree socioeconomic segments, more so than even Brazil or Mexico. Notethat in Argentina, socioeconomic status is determined by the occupationand level of education attained by the main income earner in eachhousehold, the possession of consumer goods and housing factors such asstyle, size, materials and appearance.

According to the Prince & Cooke study, 95% of internet users fall in thethree uppermost income strata. This percentage, which is high incomparison to other major Latin American internet markets, reflects thefact that the average GDP per capita in Argentina is much greater than inmost other countries in the region. It is also indicative of the profile of theaverage Argentine user, who is well-educated, urban and of considerableeconomic means.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Prince: Years of Internet Use in Argentina, 2000 (by Age, and Gender, and Socioeconomic Strata)Age < 1 Yr. 1–2 Yrs. 2–4 Yrs. 4 Yrs. +

Up to 18 36% 50% 12% 2%

19–24 28% 53% 14% 5%

25–29 18% 35% 35% 12%

30–39 21% 35% 35% 9%

40+ 31% 42% 22% 5%

Gender

Male 22% 39% 29% 10%

Female 31% 44% 22% 3%

Socioeconomic Strata

ABC1 23% 39% 28%

C2 27% 47% 23%

C3 41% 32% 18%

Note: percentages are approximated from bar charts. Source: Prince & Cooke, 2000


98


C. eCommerceArgentina’s relative economic health sets it apart from other countries inthe region. Per capita GDP is among the highest in Latin America and mostArgentines are highly literate. More than one-third of the populationresides in the capital city of Buenos Aires, providing a highly concentratedpotential market of online consumers. Both B2C and B2B e-commercerevenues will increase markedly in the years ahead, although steepergrowth in Mexico will prevent Argentina’s share of total Latin American e-commerce from climbing past 11% at any point between 2000 and 2004.

eMarketer’s e-commerce estimates for Argentina fall toward the middle ofthe pack of forecasts by other research firms. Forrester Research’s estimateis the highest, while Morgan Stanley Dean Witter’s forecast is considerablylower than eMarketer’s. As with its other e-commerce estimates, Forrester’spredictions for Argentina are based on the notion of hyper-growth, whichis scheduled to take place in 2005.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$0.32 (9.0%)

$0.87 (9.0%)

$2.28 (11.0%)

$3.91 (10.0%)

$6.65 (10.0%)


eCommerce Revenues in Argentina, 2000–2004 (in Billions and as a % of Total Latin American eCommerce)

A/B/C1 Strata (Upper/Upper–Middle Class)

C2 Stratum (Middle Class)

C3 Stratum (Lower–Middle Class)

59%

36%

5%


Prince: Internet Users in Argentina by SocioeconomicStrata, 2000


99


With a GDP per capita (PPP) of $10,000, Argentines have greaterpurchasing power than most of their neighbors. More than a quarter of thepopulation has a credit card and most research firms have found thatArgentina has a high percentage of internet users who buy online: 17.86%in 2000 according to Jupiter Research and 23% according to Prince &Cooke. Among the “advanced” internet users (who responded to banner adsrequesting their participation in a study about the internet) surveyed byIDC, the average monthly online home expenditure in Argentina was $76,the highest among the countries surveyed and well above the average of$58 for IDC’s pan-Latin sample.

Although Argentina’s internet and telephone penetration rates areamong the highest in Latin America, the cost of telecommunicationsservice remains a hindrance to internet growth. However, this situation willundoubtedly change after Argentina completes the deregulation of theentire telecommunications market in November 2000. Competition is likelyto drive prices down, perhaps as much as 20-40%. Lower telephonecharges, combined with the government’s efforts to provide low-costinternet access to a wider segment of the population, should provide aboost to consumer e-commerce in Argentina.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

$0.11

$0.28

$0.64

$1.20


Morgan Stanley: eCommerce Revenues in Argentina, 2000–2003 (in Billions)

2000

2001

2002

2003

2004

$0.60

$1.20

$2.00

$4.40

$10.50


Forrester: eCommerce Revenues in Argentina, 2000–2004 (in Billions)


100


B2C eCommerce

Forecasts of consumer e-commerce in Argentina show a high degree ofconvergence for both 2000 and the four years ahead. We believe that theB2C e-commerce segment should begin to feel the effects oftelecommunications deregulation in the next two to three years, which inpart accounts for why eMarketer’s predictions for 2001-2003 fall towardthe higher end of the spectrum. Optimistic forecasts assume that Argentinawill climb out of its current recession and not be subject to furtherfluctuations like that caused by the devaluation of the Brazilian real in1999. Should another such incident take place, the likelihood is that itwould have a dampening effect on consumer spending in general. Growthof online commerce would be adversely affected as well.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$47

$81

$149

$311

$745


Forrester: B2C eCommerce Revenues in Argentina, 2000–2004 (in Millions)

2000

2001

2002

2003

2004

$50

$110

$300

$430

$730


B2C eCommerce Revenues in Argentina, 2000–2004 (in Millions)


101


TaxationThe Argentine government has yet to pass legislation governing e-commerce transactions. At present, therefore, e-commerce revenues are nottaxed.

Residential DeliveryBCG and Visa’s “shopping test” of 40 e-commerce sites found that 75% ofproducts arrived on time in Argentina.

Alternative Payment MethodsA survey by the market research firm D’Alessio/Harris revealed thatArgentines would prefer to pay for products they buy online once they aredelivered. However, only 28% of online consumers surveyed actually paidCOD; most paid with a credit card. The overwhelming preference for payingCOD indicates the general level of concern among Argentines about thesecurity of online credit card transactions. However, the survey resultsreported by D’Alessio/Harris also suggest that alternative payment methodsare not widely available, given that only one-third of Argentines paid bymeans other than a credit card.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

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Index of Charts

2000

2001

2002

2003

$28

$82

$193

$334


Morgan Stanley: B2C eCommerce Revenues in Argentina, 2000–2003 (in Millions)

2000

2001

2002

2003

2004

$51

$122

$248

$447

$731


Jupiter: B2C eCommerce Revenues in Argentina, 2000–2004 (in Millions)


102


Consumer Attitudes and BehaviorAccording to Prince & Cooke, only 23% (or 230,000) of Argentina’s onemillion active internet users have used the internet to make purchases.Those who buy online tend to be among the country’s most experiencedusers with better understanding of online transactions. In light of thesocioeconomic composition of Argentine internet users, they are also morelikely to have credit cards and the disposable income required to makeonline purchases.

Because of the heavy concentration of Argentina’s internet users amongthe nation’s top three socioeconomic strata, whose spending power faroutstrips the national average, companies like Citibank can launch anonline mall targeted solely at Diners Club credit card holders.

The Prince & Cooke survey found that Argentines, like other LatinAmerican online consumers, tend to use the internet to purchase books,compact discs, computer software and magazine subscriptions.

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COD

Credit Card

60%

34%

28%

78%

Bank Deposit

18%4%

D’Alessio/Harris: Online Payment Method vs. Payment Preference in Argentina, 2000

Payment MethodPayment Preference

Note: Multiple choices allowed.Source: D’Alessio/Harris, 2000


103


American Express found similar results in a recent global online attitudessurvey. Among the ten countries surveyed, Argentines indicated thegreatest propensity to purchase books, electronics and household items bya considerable margin in each category.

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18%

6%

Books

CDs

Software

Tickets

Magazine Subscriptions

Electronics

10%

8%


Prince: Consumers Buying Products Online in Argentina, 2000

48%

36%

Jewelry/Watches

Stocks and Shares

Clothes

Toys

Groceries

Household Items (e.g. appliances)

Electronics

CDs, Videos or Computer Games

Books

Event Tickets

5%

10%

10%

20%

25%

28%

35%

39%

57%

58%

Source: American Express, 2000

American Express: Anticipated Online Purchases in Argentina, 2000


104


The D’Alessio/Harris study also produced similar findings. In addition, itfound that in most cases, Argentines tend to use the internet to findinformation about rather than to buy products and services. For example,49% of Argentine internet users searched for information about software,yet only 30% actually used the internet to buy it. Of the categories theysearched, Argentines showed the greatest propensity to buy groceries,prepared meals, CDs and books on the internet, although they were alsoleast likely to search the internet for information on groceries and preparedmeals.

Argentines have found considerable advantages to buying online.According to Prince & Cooke, 62% of active internet users citedconvenience as the leading reason why they made purchases over theinternet. An additional 23% found that buying online saved time, but only12% found it to be less expensive than buying in bricks-and-mortarestablishments.

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Index of Charts

D’Alessio/Harris: Online Product Research vs. Purchases in Argentina, 2000 Category Searched for Purchased in

Information the Past Year

Software 49% 30%

CDs 47% 43%

Hardware 47% 19%

Books 45% 40%

Travel/Tourism 45% 8%

Course/Event Registration 32% 6%

Auctions 30% 9%

Vehicles (Cars/Motorcycles) 27% 0%

Household Appliances 26% 14%

Magazine/Newspaper Subscriptions 24% 8%

Online Courses 24% 3%

Basic Financial Services 19% 3%

Videos 18% 8%

Entertainment Tickets 12% 4%

Clothing 11% 7%

Groceries 5% 7%

Prepared Meals 3% 3%

Source: D’Alessio/Harris, 2000


105


Clearly, B2C e-commerce in Argentina has not reached the levels needed toachieve economies of scale. Part of this is due to cultural preferences: ascharts below reveal, a portion of the Argentine population still prefers topurchase goods from “real world” stores and suppliers. In the AmericanExpress study, 87% of respondents said they would be likely to use theinternet for research purposes, but preferred to make their purchasesoffline. 88% also said that they prefer to deal with a live human being.Trust, therefore, remains an issue for Argentine buyers, but particularlyamong those who are internet novices.

When making purchases online, Argentines demonstrate a continuedpreference for foreign sites. An IDC study conducted earlier this year foundthat 34% of online consumer spending in Argentina went to domestic sites.A more recent survey by InfoAmericas revealed a slightly more balancedsplit, with 37% of spending going to domestic sites and 63% to foreignsites. However, another study by Prince & Cooke showed that only 21%favored domestic sites, while 62% preferred buying at foreign e-commerceportals. An additional 17% made purchases at both domestic and foreignsites.

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Index of Charts

Prince: Consumer Benefits of Buying Online, 2000

Convenience

Saves Time

Cheaper

62%

23%

12%


17%

Prince & Cooke

InfoAmericas

62%

63%

21%

37%

Comparative Estimates: Foreign vs. Domestic Online Spending in Argentina, 2000

DomesticForeignBoth



106


Privacy and SecurityDespite a seemingly robust online consumer marketplace, securitynevertheless remains a concern for internet users in Argentina. Amongthose surveyed by Prince & Cooke, 42% cited security concerns as a reasonwhy they chose not to buy online.

D’Alessio/Harris found that 66% of internet users did not shop onlinebecause they feared giving out their credit card information. 41% alsoexpressed concern about being charged for purchases they did not make.

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Hear of Bad Experiences

Prefer In–Person Assistance

Own No Credit Cards

Concern about Shipping

Fear That Purchases Won’t Be Shipped

Prefer Selecting Products in Person

Mistrust of Payment Modes

Have No Need/Opportunity

Fear of Being Charged for Purchases Not Made

Fear of Giving Out Credit Card Information

5%

9%

17%

20%

25%

29%

30%

38%

41%

66%

Source: D’Alessio/Harris, 2000

D’Alessio/Harris: Reasons for Not Buying Online in Argentina, 2000

Security Concerns

Lack Credit Card

Prefer to See Item Before Buying

Provides No Benefits

42%

12%

11%

7%


Prince: Reasons for Not Buying Online in Argentina, 2000


107


The American Express survey found that more than three quarters or 77%of Argentines expressed concern about the security and privacy of personalinformation when making purchases or financial transactions online.However, this figure is a projection based on those who are currentlyinternet users as well as those who intend to become users, so thelikelihood is that the Argentines who are not yet users accounted for thishigher level of concern. Incidentally, the figure reported by AmericanExpress was below the average for the ten countries surveyed for the study.

B2B eCommerceeMarketer foresees robust growth in Argentina’s B2B e-commerce marketover the next few years, with revenues climbing from $270 million in 2000to $5.92 billion in 2004. These estimates put eMarketer in the middle offorecasts by other research firms. As with optimistic predictions for growthin the B2C segment, development of the B2B market will depend oneconomic stability and the capacity of businesses to make the necessaryongoing investments to bring their operations online.

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Index of Charts

2000

2001

2002

2003

2004

$0.27

$0.75

$1.98

$3.48

$5.92


B2B eCommerce Revenues in Argentina, 2000–2004 (in Billions)


108


eMarketer and Forrester Research estimates show convergence through2003, and then begin to diverge widely by 2004, as Argentina approacheswhat Forrester sees as the country’s period of hyper-growth. Once again,Computer Economics is the outlier of the group, predicting B2B revenuesfor 2000 that are one hundred times as large as eMarketer’s forecast.

Business Internet PenetrationAccording to a Prince & Cooke survey, 86.8% of small and medium-sizedenterprises (SMEs) have internet access. Other findings indicate that SMEsand large businesses are well represented online and are increasingly usingthe internet both for procurement and as a sales channel. Prince & Cookepredicts dramatic growth in the percentage of all Argentine businessesselling online by year-end 2001.

Meanwhile, InfoAmericas estimates that just over 80% of Argentinecompanies have a computer in their purchasing department and/or uppermanagement. Approximately 70% of purchasing departments have internetaccess, but just over 10% have actual experience with e-procurement.

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Comparative Estimates: B2B eCommerce Revenues in Argentina, 2000–2004 (in Billions)

2000 2001 2002 2003 2004

eMarketer $0.27 $0.75 $1.98 $3.48 $5.92

Forrester Research $0.62 $1.06 $1.95 $4.08 $9.76

Morgan Stanley $0.08 $0.20 $0.45 $0.86

Computer Economics $27.55 $48.21 $72.32 $89.19

Source: eMarketer, 2000; various, as noted, 2000

SMEs

Large Businesses

72.7%

92.0%

36.8%

68.2%

Prince: Argentine Businesses with a Website, 2000–2001

2000 2001



109


D. eAdvertisingArgentina has the highest rate of cable television penetration in LatinAmerica and one of the highest rates in the world, so it is not surprisingthat television advertising dominates all other media. Morgan Stanley DeanWitter expects that internet advertising will constitute just 0.5% of total adspending in Argentina in 2000, but expects that the internet’s share shouldincrease to 5.8% by 2003 as more users come online.

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% Selling Online

% Buying Online

36.2%6.4%

17.3%

Prince: SMEs Transacting Online, 2000–2001

2000 2001


% Selling Online

% Buying Online

50.6%12.2%

20.9%

Prince: Large Businesses Transacting Online, 2000–2001

2000 2001


2000

2001

2002

2003

$14

$29

$70

$189


Morgan Stanley: Argentine Online Advertising Expenditure, 2000–2003 (in millions)


110


E. eMobileWith Argentina’s telecommunications sector now completely open tocompetition, the market should see the entrance of new players offeringenhanced services. Growth of the wireless market will depend largely onhow long Argentina takes to climb out of its current recession.

Wireless Subscriptions, Users and PenetrationThe Strategis Group reported that Argentina had 5.22 million wirelesssubscribers as of the second quarter of 2000, which translates into awireless teledensity of 14.12 subscribers per 100 inhabitants. The ITU found4.43 million subscribers as of year-end 1999, while the Yankee Groupprojects 5.92 million subscribers for 2000, increasing to 10.54 million in2004. By the middle of the decade, the Yankee Group estimates that nearly30% of the population will have a wireless subscription.

Given that Argentina has one of the region’s most highly developedwireline infrastructures, InfoAmericas predicts that wireless teledensity willnot begin to exceed fixed-line teledensity until around 2006.

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InfoAmericas: Wireless and Fixed–Line Teledensity in Argentina, 2000–2003

2000 2001 2002 2003

Wireless 14.1% 16.4% 19.0% 22.0%

Fixed Telephones 23.4% 24.9% 26.3% 27.9%


5.92 (16.0%)

7.31 (19.5%)

8.51 (22.4%)

9.59 (24.9%)

2000

2001

2002

2003

2004 10.54 (27.0%)

Source: The Yankee Group, 2000

Yankee Group: Wireless Subscribers in Argentina,2000–2004 (in millions and as % of population)

VIII


I Overview



IV eCommerce

V eAdvertising

VI eFinance


VIII Country Reviews: Brazil 111

A. Overview 112


C. eCommerce 121

D. eAdvertising 132

E. eMobile 133



Index of Charts


111



112


A. Overview

With one-third of the region’s population, Brazil is the single largestmarket for internet services and e-commerce in Latin America and theCaribbean. The demographic statistics are staggering: Brazil is highlyurbanized, with 81% of its population living in cities, ten of which havemore than 1 million inhabitants. The two largest cities, São Paulo andRio de Janeiro, have 17.7 and 10.6 million residents, respectively.Because 49% of Brazilians are 24 and under, this “baby boom” willform a potentially lucrative internet market in the decade ahead. Theconcentration of the population in cities will facilitate the delivery ofgoods ordered online, and in part compensate for the vast distancesthat separate Brazil’s many urban centers.

Accelerated development of the telecommunications infrastructure isnecessary to widen the pool of internet users beyond 16.42 million by2004. The International Telecommunications Union estimates that only15% of Brazilians had a fixed-line telephone in 1999, so the country needslots of wiring before people can get online en masse. According to the USDepartment of Commerce, teledensity varies considerably throughout thecountry, with the most highly developed infrastructure(telecommunications and otherwise) concentrated in the South andSoutheast regions, where incomes and population density are the highest inthe country. The disparity is considerable: 23% of the population in theSouth has a fixed-line phone versus only 8% in the Northeast. A majorityof internet users are concentrated in the metropolitan regions of São Pauloand Rio de Janeiro, Brazil’s two largest cities.

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Index of Charts

QuickStats: Brazil, 2000Total Population (in Millions)1 172.9









Source: 1US Census Bureau, 2000; 2eMarketer, 2000; 3World Bank, 2000; 4International Monetary Fund (IMF), 2000; 5International Telecommunication Union (ITU), 2000


113


Telebrás, the state-owned telephone monopoly, was privatized in 1998.Competition is due to be introduced in the local loop in 2000 and fullmarket liberalization is scheduled to follow in 2002. A positive outgrowthof privatization has been the strict performance quality and improvementguidelines imposed on both fixed-line and wireless licensees. On the downside, Brazil currently has some of the region’s highest metered local phonecharges, averaging $0.028 per minute according to ebusinessforum.com.Taxes on local calls are also high, typically around 40%.

Bradesco, one of Brazil's largest commercial banks, started a revolutionin Brazil’s internet market in December 1999 when it launched its freeinternet service. In the rush to compete, other commercial banks andleading paid ISPs (Internet Service Providers), such as Terra Networks andUOL, quickly followed suit with their own free offerings. Independentcompanies also joined the no-fee market.

Now it seems that the free ISP may have been an idea ahead of its time.Already, several Brazilian free ISP services have failed. Because currenttelecommunications regulations do not compel local telephone companiesto share connection charges with ISPs, the free internet services mustcompete for a limited pool of online advertising dollars for the bulk of theirrevenues. However, the internet advertising market is simply not largeenough to support the host of competitors offering free services. Accordingto various estimates, Brazil absorbs approximately 64% ($80 million) of allof online ad expenditures in Latin America, a figure that represents onlyabout 1% of the country’s total ad spending.

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114


Nevertheless, the shrinking number of free ISPs will not have a substantialimpact on the number of internet users in Brazil. First, the likelihood is thatthe remaining players in the free ISP marketplace will absorb thesubscribers of the failed services. Second, for the middle- to upper-classpeople who make up the majority of Brazil’s internet user population,paying the monthly cost of an ISP (which is close to the monthly telephonecharge of regular users) represents a minor additional burden. Theadditional cost may lead some users to ration their online time, but it isunlikely to deter overall internet usage. Finally, according to a recent studyby Media Metrix, nearly 75% of Brazil’s users have been accessing theinternet for more than a year, which means that most have been onlinesince before the advent of free services. In any case, a survey by theBrazilian market research firm, IBOPE, revealed that regular internet usersin Brazil prefer to pay for their internet service.

The demise of some of the larger free ISPs does not necessarily signal theend of the free internet services in Brazil. Banks, which are able to bothdraw on an enormous pool of capital and save money on transaction costseven as they offer free internet services to customers, are likely to maintaintheir free services for the foreseeable future. They also have a captiveaudience of consistent users that is attractive to online advertisers. LargeISPs that continue to maintain no-fee subsidiaries, such as Terra Networks'Terra Livre, may use the free services as loss-leading marketing tools tohelp build up the brand identity of the pay services. Meanwhile,independent companies are pinning their futures on their ability toleverage the free services to cross-sell users a variety of paid products andvalue-added services.

Accordingly, growth in the number of internet users should proceed at anexponential pace over the next couple of years. Higher internet penetrationrates, however, will only come after 2002, when Brazil is scheduled to fullyderegulate its telecommunications market. This should help bring down theprice of access, and in so doing, help to spread the internet to a broaderportion of Brazil’s population. In the interim, as part of an effort to boostnationwide internet usage, the Brazilian government, with financialassistance from private sector and non-profit organizations, plans toconnect thousands of schools to the internet and install Internet kiosksthroughout the country.

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115


B. Internet Users and eDemographicseMarketer estimates that 3.91 million Brazilians 14 years or older will beactive internet users in 2000. By 2004, 16.42 million Brazilians will beactively using the internet. Among the pool of active users, the internetpenetration rate will be 3.1% in 2000, and will remain in the single digitsuntil 2004, when it will rise to 12.3%. Through 2004, Brazil will remain theinternet powerhouse in Latin America, retaining approximately 40% ofLatin America's internet users and at least 60% of total regionale-commerce.

Morgan Stanley Dean Witter and Jupiter Research project user bases thatare considerably higher than eMarketer’s estimates for the next four years –largely due to different definitions of users. Compared to eMarketer’scalculation of 3.91 million active internet users in 2000, Morgan Stanleyforecasts a user base of 5.59 million, while Jupiter’s estimate puts thenumber at 8.39 million. Morgan Stanley projects 32.45 million users inBrazil by 2010.

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3.9 (3.1%)

6.1 (4.8%)

8.8 (6.8%)

12.5 (9.5%)

2000

2001

2002

2003

2004 16.4 (12.3%)


Internet Users in Brazil, 2000–2004 (in Millions and as a % of Population 14+)

2000

2002

2004

2010

5.6

10.9

17.1

32.5


Morgan Stanley: Internet Users in Brazil, 2000–2010 (in Millions)


116


By contrast, IDC and Pyramid Research offer estimates that are fairly closeto eMarketer’s projections through 2002. For example, eMarketer’s estimateof 3.91 million active internet users in 2000 compares favorably with IDC’sprojection of 4.21 million and Pyramid’s forecast of 4.30 million. By 2004,however, eMarketer projects a user base that exceeds the estimates of bothIDC and Pyramid.

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Brazil

Mexico

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Index of Charts

2000

2002

2004

8.4

15.4

24.7


Jupiter: Internet Users in Brazil, 2000, 2002, & 2004 (in Millions)

2000

2002

2004

4.3

9.0

12.7


Pyramid: Internet Users in Brazil, 2000, 2002, & 2004 (in Millions)

2000

2002

4.2

6.5

Source: International Data Corp., 2000

IDC: Internet Users in Brazil, 2000 & 2002 (in Millions)


117


Additional estimates from Ernst & Young, the Internet Industry Almanac,IBOPE, Computer Economics and Media Metrix are fairly consistent withthe comparative forecasts above.

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Index of Charts

17.1

12.7

16.4

Jupiter Research

Morgan Stanley

Pyramid Research

IDC

eMarketer

15.4

10.9

9.0

6.5

8.8

8.4

5.6

4.3

4.2

3.9

Comparative Estimates: Internet Users in Brazil, 2000,2002, & 2004 (in Millions)

200020022004

Source: eMarketer, 2000; various, as noted, 2000

24.7

5.2

8.7

Ernst & Young (2000)

Ernst & Young (2002)

Internet Industry Almanac (2000)

Media Metrix** (2000)

IBOPE* (2000)

Computer Economics (2003)

7.2

7.3

Notes: * Home users; projections based on survey administered in Brazil’s 9 largest cities; ** home users; projections based on survey administered inBrazil’s 10 largest cities. Source: various, as noted, 2000

Comparative Estimates: Internet Users in Brazil, 2000–2003 (in Millions)

5.0

15.0


118


Demographic ProfileBrazil is not only the largest internet market in the region, but also one ofthe most gender equal. A recent study by Media Metrix found that 57% ofinternet users in Brazil are male, while 43% are female. By comparison, asurvey by the Brazilian market research firm IBOPE found that only 53% ofinternet users are men.

Brazil’s internet market is also notable for its youth. The Media Metrixsurvey revealed that 69% of Brazil’s internet users are age 34 and under,with the majority (33%) concentrated in the 18-24 segment.

Relative to the rest of the region, Brazil’s internet users are fairlyexperienced surfers: Media Metrix found that 73% had been accessing theinternet for at least a year. By comparison, a 1999 Nazca Saatchi & Saatchistudy found that on average, 42% of all Latin Americans and 54% of allBrazilians had been online for only one year or less. In the Media Metrixstudy, 24% had been online for two to three years, and an additional 28%had been accessing the internet for one to two years.

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Index of Charts

18–2432.5%

2–114.9% 12–17

13.8%

35–4413.9%

25–3417.5%

45–5412.7%

55+4.6%

Note: May not add up to 100% due to rounding. Source: Media Metrix, 2000

Media Metrix: Internet Users in Brazil, 2000 (by Age)

IBOPE

Media Metrix

47%

43%

53%

57%

Comparative Estimates: Internet Users in Brazil, 2000 (by Gender)

Female Male



119


The Media Metrix and IBOPE studies confirm that Brazil’s internet users areheavily concentrated in the nation’s top-three socioeconomic segments.Note that Brazil’s national marketing association defines socioeconomiclevels based on a head of household’s educational achievements as well asthe number of consumer goods (TVs, vacuums, washing machines, radios)domestic helpers and bathrooms in each household.

Media Metrix estimates that 80% of internet users fall in the threeuppermost income strata, while the IBOPE survey puts the percentage at acolossal 96%. The Media Metrix survey is based on interviews conducted inBrazil’s ten largest metropolitan regions, while the IBOPE survey is basedon the nine largest metropolitan areas.

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eCommerce

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eFinance

Argentina

Brazil

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Index of Charts

C Stratum

A/B Strata

16%

80%

17%

63%

D/E Strata

4%10%

Comparative Estimates: Internet Users in Brazil by Socioeconomic Strata, 2000

Media Metrix IBOPE


1–2 Yrs.28%

Less Than 1 Yr.27%

2–3 Yrs.24%

3–4 Yrs.7%

4–5 Yrs.7%

5 Yrs. +7%

Source: Media Metrix, 2000

Media Metrix: Internet Users in Brazil, 2000 (by Number of Years Online)


120


Media Metrix found that 55% of internet users are part of the economicallyactive population, with 38.3% of respondents working full time and 16.2%part time. An additional 22% of users are students.

Meanwhile, IBOPE revealed that “heavy users”–those who access the webevery day or almost every day and who constitute fully 50% of the userpopulation in the IBOPE study–tend to opt for paid service providers.

■ 45% of heavy users prefer to pay for their internet service ■ 21% favor free services ■ 32% use both paid and free services

Home users, who represent just over half of the Brazilian internet userpopulation according to several studies aggregated for the Maximidia tradeshow held in São Paulo in September 2000, also opt to pay for theirinternet service, with 40% selecting paid ISPs, 25% choosing free servicesand 22% utilizing both.

In terms of domain preferences, Brazilian internet users are also tendingaway from domestic web sites. In the past, Brazilian users had been drawnmostly to local content. The May 2000 eMarketer report on Latin America,for example, revealed that an overwhelming 84% of Brazilians preferreddomestic web pages and 82% preferred content in Portuguese (as opposedto English).

However, these preferences were due in large part to the lack of contentin Portuguese. In the past year, portals like Yahoo!, Altavista and AOL andweb services like ICQ, Real.com and Passport have recognized the potentialof Brazil’s internet market and have added Portuguese-language contentand/or Brazilian versions of their sites. According to a recent report byMedia Metrix, AOL Brazil, Microsoft’s sites and Yahoo! were among the topfive internet properties in Brazil. Spain’s Terra Networks was the sixthlargest in terms of the number of unique users. As more Portuguese-language content becomes available, the likelihood is that Brazilian userswill flock to it, even if it is not on Brazilian sites.

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Index of Charts

WorksFull Time38.3%

Unemployed3.8%

WorksPart Time16.2% Student

22.0%

Housewife4.9%

Retired5.2%

Freelancer9.6%

Source: Media Metrix, 2000

Media Metrix: Employment Status of Internet Usersin Brazil, 2000


121


C. eCommerceDespite a relatively low per capita GDP (PPP) of $6,150, Brazil’s highlyunequal income distribution means that the wealthy have enough incometo create a sizeable e-commerce market. Accordingly, e-commerce willgrow from $2.47 billion in 2000 to $39.90 billion by 2003. Brazil’srevenues in both the consumer and business segments are far and away thehighest in Latin America, although the B2B sector will account for themajority of e-commerce revenues generated in Brazil.

With only 18% of the country holding credit cards, buying online isfeasible only for a small (albeit wealthy) segment of the population. Whileprepaid debit cards and other mechanisms for transacting business onlineare in the process of being developed, they will not penetrate thepopulation until two to three years down the road. In fact, a studyconducted for DHL Worldwide Express among companies in 12 countriesconcluded that at 4.3%, Brazil had one of the lowest percentages of salesvia the internet. Only Japan (at 1.1%) and Singapore (at 4.0%) producedlower results. By contrast, 20.0% of sales in Hong Kong took place over theinternet, followed by 13.9% in the United States. On the other hand, theDHL study found that Brazil was among the most successful countries atconverting site visits to sales: approximately 11% of visitors to Brazilian e-commerce sites actually made an online purchase. Only Finland and theUS showed slightly higher conversion rates and more significantly, thepercentage of site visitors who bought online Brazil far exceeded that ofGermany, the UK and Japan.

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eCommerce

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Argentina

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Index of Charts

2000

2001

2002

2003

2004

$2.47 (69.1%)

$6.55 (68.0%)

$12.63 (61.0%)

$24.25 (62.0%)

$39.90 (60.0%)


eCommerce Revenues in Brazil, 2000–2004 (in Billions and as a % of Total Latin American eCommerce)


122


eMarketer and Forrester Research estimates show convergence through2003, and then begin to diverge widely by 2004, as Brazil enters whatForrester sees as the country’s period of hyper-growth. Morgan StanleyDean Witter and IDC forecasts show convergence at the lower end of thespectrum, but we believe they do not take into sufficient account thepotential of the Brazilian market. As more analysts highlight the size andcapacity for growth of Brazil’s e-commerce markets, an increasing numberof B2C and B2B e-commerce firms will be compelled to focus theirstrategies on Brazil, and this, in turn, should drive up revenues.

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Index of Charts

2000

2001

2002

2003

2004

$0.38

$0.80

$1.55

$2.70

$3.04

Source: International Data Corp. (IDC) and Banco Santander CentralHispano (BSCH), 2000

IDC/BSCH: eCommerce Revenues in Brazil, 2000–2004 (in Billions)

2000

2001

2002

2003

$0.49

$0.99

$1.90

$3.15


Morgan Stanley: eCommerce Revenues in Brazil, 2000–2003 (in Billions)

2000

2001

2002

2003

2004

$2.40

$4.77

$10.07

$24.25

$63.96


Forrester: eCommerce Revenues in Brazil, 2000–2004 (in Billions)


123


B2C eCommerceBricks-and-mortar retailers such as the Pão de Açucar supermarket chain,the Lojas Americanas discount retail chain, and booksellers like Saraivaand Livraria Siciliano are among the pioneers and class leaders in the B2Csegment. They have been able to exploit their strong offline brands on theinternet, in large part because they have offered consumers onlineexperiences that are consistent with their offline shopping habits.

On the basis of its already successful online grocery order and deliveryservice (in operation in major urban areas since 1996), Pão de Açucar, forexample, has launched a portal under a new name, Amelia.com, that aimsto offer consumers integrated content, community and commerce. Userswill be able to search for recipes and order the groceries need to prepare toprepare them. The new company will be able to capitalize on thesupermarket chain’s highly integrated supply chain and efficient logisticsoperations.

Americanas.com, the online subsidiary of Lojas Americanas, has alsobuilt up its operation with a logistics focus. For example, it allows buyers tosee only those items that are in stock and track their orders online. Theonline store can also leverage the considerable presence of the bricks-and-mortar operation through in-store advertising, internet kiosks and productreturns. On the other hand, Ponto Frio, an even larger, middle-marketappliance retailer, currently uses the internet as an additional saleschannel.

eCommerce is also becoming increasingly important for portals,especially as they find they cannot survive solely on the limited amount ofonline advertising funds. Companies like Universo Online (UOL) areenhancing their content offerings by making available a wide range ofmerchandise in conjunction with both online and brick-and-mortarretailers. By offering popular products such as CDs, books and computerequipment, portals can effectively leverage their considerable traffic andgenerate additional revenue streams at their “online malls.”

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$0.52

$1.24

$2.15

$3.64

$5.19


B2C eCommerce Revenues in Brazil, 2000–2004 (in Billions)


124


eMarketer’s estimates for consumer e-commerce exceed those of all otherresearch firms, again in part because we foresee a “network effect” takingplace in Brazil. Estimates from other firms display relative convergence.

Despite the fact that a relatively small percentage of the populationcurrently has a credit card, the portion of the population that does hassufficient spending power to drive up consumer e-commerce revenues.Moreover, because the potential of the market remains vast, credit cardcompanies will make concerted efforts to bring smart cards and other formsof electronic money to a large portion of the population. eCommercemerchants will flock to Brazil for the same reason.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$0.17

$0.34

$0.71

$1.72

$4.54


Forrester: B2C eCommerce Revenues in Brazil, 2000–2004 (in Billions)

2000

2001

2002

2003

$0.19

$0.36

$0.63

$0.89


Morgan Stanley: B2C eCommerce Revenues in Brazil, 2000–2003 (in Billions)

2000

2001

2002

2003

2004

$0.32

$0.67

$1.22

$2.01

$3.04


Jupiter: B2C eCommerce Revenues in Brazil,2000–2004 (in Billions)


125


TaxationBrazil does not currently have any tax legislation specific to onlinecommerce nor has the government appointed any regulatory agency tooversee internet commerce. At present, online transactions are subject tothe same taxes as offline transactions. The most commonly imposed duty isa value-added tax on goods and services, the rate of which is defined byeach state.

However, unlike offline transactions, taxes on online purchases areimposed according to the state in which the e-commerce firm is located, asopposed to the state in which the buyer resides or the good in question isproduced. Because most of the Brazilian internet industry in based in SãoPaulo, many people making online purchases end up paying taxes to a statein which they do not reside.

In addition, a study by ebusinessforum.com reveals that the Braziliangovernment imposes a flat 60% tax on the declared value of goods arrivingin the country via express-delivery services like FedEx, United ParcelService and DHL Worldwide Express. However, this tax does not apply ifshipments arrive by traditional, non-express-delivery services.InfoAmericas estimates that 80% of Brazilian B2C purchases originatewithin the country, largely due to high import tariffs and customs fees.

The Brazilian government recently announced a decision allowingautomobile manufacturers to sell cars online directly to consumers. Themain advantage of direct invoicing for consumers is that they will now payfewer taxes, making the price of a new car purchased over the internetnoticeably lower.

Alternative Payment MethodsFor the past four years, Brazil has been experimenting with two card-baseddigital cash systems (commonly referred to as “electronic purses”), oneassociated with Visa and the other with SIBS, a Portuguese company. Bothsystems allow cardholders to load cash from their bank accounts onto theircards using home-based PCs. Between the two systems, over 135,000 cardshad been issued by year-end 1999. Nevertheless, the average dailytransaction volume and the average transaction value remain low,although the latter is consistent with average transaction values reportedby other countries around the world, including Canada, Hong Kong andseveral Western European nations.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

BIS: Number of eMoney Products in Brazil, 1999Name of Type Number of Cards Volume Value Average System Issued/Number of of Daily of Daily Value of

Home PC Users Transactions Purchases TransactionsUsing Product

VISA Cash Card–based 95,000 334 $1,477 $4.42

SIBS Card–based 40,100 960 $3,073 $3.20

Source: Bank for International Settlements (BIS), 2000


126


According to the study conducted for DHL Worldwide Express, 51% ofbusinesses surveyed regarded online payment as a barrier to thedevelopment of e-commerce markets in Brazil. Jupiter Research has foundthat “banking tickets” account for between 10% and 30% of onlineconsumer transactions. Banking tickets function similarly to bank deposits,but they have the added advantage of being payable at any major bank, notjust the merchant’s bank. In addition, COD and check-based store credit(whereby consumers purchase goods on an installment plan) remainpopular forms of payment.

Residential DeliveryAt present, Brazil lacks advanced domestic courier companies along thelines of FedEx and UPS and the existing distribution system is unreliable atbest. Ebusinessforum.com estimates that the federal post (Empresa deCorreios e Telégrafos or ECT) handles 70% of e-commerce deliveries withinthe country. In an effort to capitalize on ECT’s market dominance, thefederal government is investing in technology to meet challenge of foreigncouriers. SEDEX, ECT’s express delivery division, is rolling out a servicedesigned specifically for e-commerce deliveries. Like other internationalcouriers, it will offer door-to-door delivery, online order tracking, deliveryon Sundays and holidays and a COD payment option. The e-SEDEX servicewill initially be available only in the São Paulo metropolitan region, whichis understandable given the city’s concentration of people, spending powerand e-commerce firms.

That most other Brazilian courier companies tend to be regional and notnational complicates the development of e-commerce for Brazilianretailers, especially considering that an estimated 80% of Brazilian B2Cpurchases originate within the country. Brazil’s import tariffs and customsfees, considered among the highest in the region, largely account for thispurchasing pattern that differs from that of many other Latin Americancountries. BCG and Visa’s “shopping test” of 40 e-commerce sites foundthat 62% of products arrived on time in Brazil.

Methodology

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eCommerce

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Argentina

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Index of Charts


127


Consumer Attitudes and BehaviorFor Brazilians, shopping for food, books, music or clothes is an eminentlysocial (and often family-oriented) activity, as it is for many LatinAmericans. As such, seeing and being able to handle actual products,talking to salespeople and gathering information in person are ratherimportant components of the shopping experience. Consequently, thesecultural factors may impede the development of e-commerce in the shortterm. In the recent American Express global online attitudes survey, 90% ofrespondents said they would be likely to use the internet for researchpurposes, but preferred to make their purchases offline. This figure was thehighest among the ten countries surveyed. 92% also said that they prefer todeal with a live human being.

Another potential hurdle to overcome is the rules and laws governingconsumer protection, such as the ability to return unwanted, damaged ordefective goods. At present, the laws remain unclear. Moreover, there is noconsensus as of yet on which countries’ rules apply to cross-borderelectronic sales (i.e., who is responsible for warranty protection on itemspurchased on a US site, for example, and subsequently delivered to aconsumer in Brazil).

Despite these hurdles, Brazil still has Latin America’s largest onlineconsumer market. Books, music and food are among the most sought-afterproducts, but recent trends indicate that home appliances and electronicsgoods, from televisions to refrigerators to computers, are rising inpopularity.

The American Express study confirmed the popularity of music andbooks in Brazil. The findings also substantiate the untapped appeal ofbuying electronics goods and appliances online. Among the ten countriessurveyed, Brazilians indicated the greatest propensity to purchase CDs by aconsiderable margin but they were also the least likely to trade securitiesonline. The latter figure undoubtedly reflects the fact that in comparison toUS citizens, proportionally far fewer Brazilians have stock portfolios ortrade securities either on- or offline. On the other hand, 50% of Brazilianssurveyed by American Express thought that banking and doing otherfinancial transactions on the internet was more convenient. This figure isunsurprising given that performing transactions at bank branches typicallyinvolves waiting in long lines. Banking online will increasingly allowBrazilians to take advantage of the high level automation in their country’sbanking system.

Methodology

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eCommerce

eAdvertising

eFinance

Argentina

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Index of Charts


128


Privacy and SecurityThe American Express survey found that more than three-quarters or 86%of Brazilians expressed concern about the security and privacy of personalinformation when making purchases or financial transactions online.Again, this figure is a projection based on those who are currently internetusers as well as those who intend to become users, so the likelihood is thatthe many Brazilians who are not yet regular internet users pushed the levelof concern higher. Jupiter Research, for example, classifies 49% ofBrazilian internet users as “newbies” (those who have been online for lessthan one year).

Nevertheless, Brazilian e-commerce sites have not been effective atcommunicating to consumers how they handle personal and financial data.According to a study by the US consultancy PricewaterhouseCoopers(PwC), 83% of Brazilian B2C sites have not adequately disclosed theirprivacy policy. Moreover, few provide clear mechanisms for returning orexchanging damaged or defective products and for getting refunds, in partbecause local standards for consumer protection are still evolving. In aneffort to improve consumer confidence in online buying sites, PwC isoffering (for a fee) to provide its BetterWeb seal of approval to those B2Csites that meet its established standards for privacy, security and customerservice.

Methodology

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eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Stocks and Shares

Jewelry/Watches

Groceries

Clothes

Toys

Household Items (e.g. appliances)

Electronics

Event Tickets

Books

CDs, Videos or Computer Games

4%

5%

11%

15%

18%

21%

28%

42%

47%

58%

Source: American Express, 2000

American Express: Anticipated Online Purchases in Brazil, 2000


129


On the security front, Visa has been making efforts to expand usage of theSecure Electronic Transaction (SET) protocol among Brazilian onlinemerchants and expects that 500 e-businesses will have adopted thetechnology by year-end 2000. Banks like Bradesco, Brazil’s largestcommercial financial institution, have also been quick to realize thatsecurity concerns inhibit e-commerce, and have positioned themselves asintermediaries in the B2C segment. Due to heavy investment in informationtechnology, particularly secure encryption systems, in the 1990s, banks arewell-positioned to provide the transaction “backbone” for other onlinemerchants.

B2B eCommerceOver the next few years, business-to-government (B2G) e-commercerevenues should grow considerably. The Brazilian state is large andgovernment expenditures account for 16% of GDP. By 2004, the Braziliangovernment expects to bring all of its procurement online, not only to savecosts but also as part of an effort to inject greater transparency in publicexpenditures. The state-owned Banco do Brasil (BB) is even getting intoB2B e-commerce through its agribusiness web site, Agronegocios. BB willoffer a line of credit to producers and agricultural cooperatives thatpurchase raw materials the Agronegocios site’s auction channel. Based onincreased business and government involvement in e-procurement andsales, eMarketer predicts dramatic growth in Brazilian B2B e-commerce,with revenues soaring from $1.95 billion in 2000 to nearly $35 billion in2004.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$1.95

$5.30

$10.48

$20.62

$34.72


B2B eCommerce Revenues in Brazil, 2000–2004 (in Billions)


130


eMarketer and Forrester Research estimates show convergence through2003, and then begin to diverge widely by 2004, as Brazil enters its periodof hyper-growth. Other estimates diverge greatly, with ComputerEconomics the outlier of the group and Morgan Stanley Dean Wittercoming in at the low end of the spectrum. Assessments of Brazil’s potential,which vary widely from extreme optimism to deep pessimism, in partaccount for this divergence. Cautious optimism is warranted given thatBrazilian companies still have to take considerable steps to bring theiroperations online; we believe that the pace of this process will intensify asfirms realize the cost savings and increased margins that they stand toachieve.

Comparative Estimates

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

$0.30

$0.63

$1.27

$2.26


Morgan Stanley: B2B eCommerce Revenues in Brazil, 2000–2003 (in Billions)

2000

2001

2002

2003

2004

$2.23

$4.43

$9.36

$22.53

$59.42


Forrester: B2B eCommerce Revenues in Brazil, 2000–2004 (in Billions)

2000

2001

2002

2003

$62.26

$108.96

$163.44

$201.58


Computer Economics: B2B eCommerce Revenues in Brazil, 2000–2003 (in Billions)


131


Top B2B eCommerce IndustriesAccording to Symnetics, a Brazilian consultancy, sales of industrialproducts constitute the bulk (or 70%) of the B2B market, while services,including MRO (Maintenance, Resources and Operations) and logisticsaccount for approximately 30% of B2B transactions. The exact size of themarket for industrial products is difficult to estimate, given that many B2Bfirms are still privately held. However, Symnetics research has found that37% of B2B portals in Brazil serve the construction industry, 18% arededicated to textiles and the remaining 45% are split evenly among theautomotive, metals, mining, chemicals and consumer packaged goodsindustries. While not an exact portrait, this breakdown at least provides anoutline of the overall B2B market, as the concentration of portalspresumably represents opportunities for online procurement systems.

Business Internet PenetrationInfoAmericas estimates that approximately 90% of Brazilian companieshave a computer in their purchasing department and/or uppermanagement. Just over 60% of purchasing departments have internetaccess, but under 20% have actual experience with e-procurement.

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eCommerce

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Argentina

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Index of Charts

Construction37%

ConsumerPackaged

Goods9%

Metals9%

Mining9%

Chemicals/Petrochemicals9%

Textiles18%Automotive

9%Source: Symnetics, 2000

Symnetics: Distribution of Industrial B2B Portals by Industry


132


Logistics and Supply Chain ManagementSupply chain logistics remain the major challenge to Brazilian e-tailers inboth the B2C and B2B sectors, particularly because the supply chain isfragmented and disorganized. In this respect, traditional retailers have anadvantage because they already have experience dealing with suppliers.Ebusinessforum.com estimates that only 15 suppliers in Brazil (two ofwhich are Brazilian while the remaining are multinational firms) arecapable of “cross-docking”–a precise logistical process that allows theretailer to avoid maintaining inventory. Thus, to insulate themselves fromdisrupting their offline operations and to streamline procurementprocesses, retailers like the Pão de Açucar supermarket chain are buildingdedicated local and regional distribution warehouses. They are also in theprocess of integrating their supplier network in proprietary or third-partyventures or online consortia (often joining with other large internationalchains in their same market segment).

The fragmentation of the supply chain also means that there isconsiderable opportunity in developing vertical portals that effectivelyintegrate different elements of the supply chain. The automotive industry(particularly Volkswagen) has been successful in building e-procurementsystems and mechanisms for purchasing cars online. Supermarket chainshave also been very active in this sector.

D. eAdvertisingAdvertising expenditures, both online and off, dropped sharply in the wakeof the devaluation of the real. Because Brazil is Latin America’s largestadvertising market, the drop in expenditures had a dampening effect onadvertising in the region as a whole. However, with the economy havingrebounded and showing strong signs of growth, ad spending shouldincrease accordingly over the next few years. Both Morgan Stanley DeanWitter and Forrester Research forecast precipitous increases in onlineadvertising expenditures in Brazil.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

$91

$170

$342

$732


Morgan Stanley: Online Advertising Expenditure in Brazil, 2000–2003 (in Millions)


133


E. eMobileIn 1998, the Brazilian government privatized Telebrás, the state-runtelecommunications monopoly, and divided its wireless properties into tenregions. In each region, licenses were initially granted to one incumbentoperator and one competitor, know as a “mirror company.” The next roundof wireless spectrum auctions is scheduled to take place in 2001. ANATEL,Brazil’s telecommunications regulator, has stated that it will deregulateinterconnection fees for fixed-to-cellular calls, effectively transferring callreceipts from wireless operators to fixed-line companies. According to DowJones, interconnection fees currently account for 20% of wireless revenues.In conjunction with changes in the interconnection fee structure, ANATELhas also ordered the deregulation of the wireless long-distance market.Cellular users will be able to select the long-distance carrier of their choice,which analysts expect will increase network and billing expenses forcellular operators.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

$69

$145

$283

$509

2000

2001

2002

2003

2004 $890


Forrester: Online Advertising Expenditure in Brazil, 2000–2004 (in Millions)


134


Wireless TechnologyIn June 2000, the Brazilian government authorized the auction of nine newcellular licenses for PCS concessions, which will allow GSM operators toenter the market. This decision will also add another competing standard tothe existing TDMA and CDMA platforms. The Brazilian governmentexpects to auction PCS licenses in 2001. Among Brazil’s ten cellularregions, TDMA is currently the dominant technology, although CDMA hasmade inroads in the populous and wealthy South and Southeast regions(comprised by Regions 1, 2, 3 and 5), which include country’s two largestcities, São Paulo and Rio de Janeiro, as well as in the Northeast (Region 9),including the populous state of Bahia.

Methodology

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eAdvertising

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Argentina

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Mexico

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Index of Charts

Yankee Group: Cellular Technology Market Share Brazilby Operating Area, 2000

CDMA TDMA Analog

Regions I & II (São Paulo) 42.9% 36.9% 20.2%

Region III (Espírito Santo, Rio de Janeiro) 43.5% 37.8% 18.7%

Region IV (Minas Gerais) 0.0% 75.6% 24.4%

Region V (Paraná, Santa Catarina) 19.5% 76.6% 3.9%

Region VI (Rio Grande do Sul) 0.0% 85.1% 14.9%

Region VII (Acre, Federal District, Goiás, Mato Grosso, Mato Grosso do Sul, Rondônia, Tocantins) 0.0% 72.0% 28.0%

Region VIII (Amapá, Amazonas, Maranhão, Pará, Roraima) 0.0% 70.7% 29.3%

Region IX (Bahia, Sergipe) 31.5% 39.5% 29.0%

Region X (Alagoas, Ceará, Paraíba, Pernambuco, Piauí, Rio Grande do Norte 0.0% 78.9% 21.1%



135


Wireless Subscriptions, Users and PenetrationBecause of Brazil’s uneven income distribution and low average GDP percapita, Brazilians have embraced prepaid calling plans. The subscriber basehas swelled and will continue to grow as more operators turn to the prepaidconcept. At the same time, research by the Yankee Group has found thataverage revenues per user (ARPU) and average talk time per customer permonth (minutes of use or MOU) have been dropping and will likelycontinue this trend. The significant fall in ARPU between 1997 and 1999 isdue in large part to a general fall in cellular phone charges in Brazil, whichresulted from greater competition between the incumbent carriers and“mirror companies” licensed in 1998 after the privatization and splitting upof Telebrás’ monopoly over wireless services. The increasing popularity ofprepaid plans has also driven ARPU and MOU down in Brazil (as has beenthe case in other Latin American countries where prepaid calling isavailable). Growth in the number of prepaid subscribers has occurredpredominantly among lower-income consumers who, when paying by theminute, are likely to restrict usage of their wireless phones.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

1998

1997

204

209

$73

$101

2000

1999

132

165

$31

$35

2001

125$29

ARPU MOU


Yankee Group: Average Revenue per Wireless User and Average MOU per Month, 1997–2001

America’s Network: Wireless Subscribers in Brazil, 2000–2005 (in Millions)

2000 2001 2002 2003 2004 2005

Prepaid subscribers 11.81 18.85 24.48 29.39 33.61 37.37

Contract subscribers 9.37 9.54 9.59 9.68 9.78 9.94

Total Subscribers 21.18 28.39 34.07 39.07 43.39 47.31

Source: America's Network Telecom Investor Supplement, Sept. 2000


136


America’s Network prediction of aggressive growth in prepaid subscribersaccounts in part for its estimates being higher than Yankee Group’s.Meanwhile, the Strategis Group’s estimates include data as reported byBrazil’s cellular operators and are current as of the second quarter of 2000.

According to ANATEL, Brazil’s telecommunications regulator, the numberof wireless and fixed-line telephones will equalize around 2005, bringingwireless and wireline teledensity to the same level. Assuming infrastructureinvestments continue at the same torrid pace and Brazil follows regionaltrends, the number of wireless subscribers should exceed the number offixed-line telephones in the second half of the decade.

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Index of Charts

ANATEL: Wireless Subscribers and Fixed–LineTelephones in Brazil, 2000–2005 (in Millions and as % ofPopulation)

2000

2001

2002

2003

2004

2005

21.5 (19.2%)

35.0 (20.9%)

29.2 (17.2%)

40.5 (23.9%)

37.5 (21.9%)

45.1 (26.3%)

45.5 (26.2%)

49.6 (28.5%)

52.5 (29.8%)

53.8 (30.6%)

58.0 (32.6%)

58.0 (32.6%)

Source: ANATEL, 2000

Wireless

Fixed Telephones

Comparative Estimates: Wireless Subscribers in Brazil, 2000–2004 (in Millions)

2000 2001 2002 2003 2004

ANATEL 21.5 29.2 37.5 45.5 52.5

Yankee Group 21.1 27.9 35.1 41.9 –

The Strategis Group 18.2 – – – –

ITU (1999) 15.0 – – – –



137


ANATEL projects far slower growth in the paging market, with the numberof users hovering around one million through 2005. As the wireless phonemarket expands and both services and handsets become moresophisticated, devices providing paging services only may become lessattractive to consumers.

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eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

2005

0.8

0.85

0.9

1.0

1.1

1.2

Source: ANATEL, 2000

ANATEL: Paging Subscribers in Brazil, 2000–2005 (in Millions)


138


IX


I Overview



IV eCommerce

V eAdvertising

VI eFinance



IX Country Reviews: Mexico 139

A. Overview 140


C. eCommerce 147

D. eAdvertising 155

E. eMobile 156


Index of Charts


139



140


A. Overview

Mexico’s poorly developed infrastructure is a major impediment togrowth in its internet market. Recent reports have indicated thatMexicans would happily spend more time online, but they arefrustrated by the slow service and frequent technological lapses of ISPsand Telmex, which is the predominant incumbent telephone operatoras well as the country’s largest ISP. Meanwhile, other operators remainfrustrated by what they regard as Telmex’s anti-competitive,monopolistic practices.

Mexico is one of the few Latin American countries with unmetered localloops. Residential telephone subscribers receive 100 local calls as part oftheir monthly line rental. According to the “Local Access Pricing and E-Commerce eCommerce” study by the Organization for Economic Co-operation and Development (OECD), unmetered local calling generallyserves to increase internet usage by lowering access costs. Mexico has alow number of access lines per capita, particularly when compared to otherOECD countries. However, when measuring the number of internet hosts inMexico relative to the number of access lines, Mexico’s performance isbetter than many other OECD nations. From 1998 to 1999, growth in thenumber of hosts per 1,000 access lines was better than that of 13 otherOECD nations, including Japan, Germany, France, Spain and Italy, all ofwhich have much higher PC penetration rates (Mexico’s PC penetration isthe lowest of any OECD nation). Unmetered pricing has unmistakablybenefited the growth of the internet in Mexico.

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Argentina

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Index of Charts

QuickStats: Mexico, 2000Total Population (in Millions)1 100.4









Source: 1US Census Bureau, 2000; 2eMarketer, 2000; 3World Bank, 2000; 4International Monetary Fund (IMF), 2000; 5International Telecommunication Union (ITU), 2000


141


However, pent-up demand for wireline and wireless phone service hasresulted in saturation of the nation’s routing capacity, even though only11% of the population has a telephone. The nation’s wireless network issimilarly saturated, and with a majority of cellular phones still operatingon analog technology, most Mexican users will not be able to access theinternet on their mobile devices, at least not until telephone operatorscomplete upgrades to the cellular network.

Beyond technological issues, poverty and income inequality remainsignificant barriers to the growth of the internet in Mexico. Approximately43% of Mexicans live on a subsistence income, while 20% of thepopulation controls nearly 60% of the country’s wealth.

With its GDP per capita of $5,452 (50% higher than Brazil’s) and apopulation of more than 100 million, Mexico represents the second largestinternet market in the region behind Brazil. Like Brazil, Mexico’spopulation is predominantly urban, with 74% residing in cities. MexicoCity, the national capital, is home to nearly one-fifth of the country’s entirepopulation.

B. Internet Users and eDemographicseMarketer estimates that 1.52 million Mexicans 14 years or older will beactive internet users in 2000. By 2004, 6.41 million Mexicans will beactively using the internet. The internet penetration rate will remain in thesingle digits for the next few years, rising from 2.2% in 2000 to 8.57% in2004. Similarly, Mexico’s share of the region’s internet market will remainunchanged through 2004, hovering close to 15%.

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1.5 (2.2%)

2.3 (3.2%)

3.2 (4.5%)

4.6 (6.3%)

2000

2001

2002

2003

2004 6.4 (8.6%)


Internet Users in Mexico, 2000–2004 (in Millions and as a % of Population 14+)


142


Morgan Stanley Dean Witter and Jupiter Research both have made largerestimates of Mexicans online than eMarketer. Compared to eMarketer’scalculation of 1.52 million active internet users in 2000, Morgan Stanleyforecasts a user base of 2.45 million, while Jupiter’s estimate puts thenumber at 2.17 million. Overall, Morgan Stanley projects the mostaggressive growth in the number of active users, forecasting 9.14 millionusers in Mexico by 2004 and 18.09 million by 2010. By contrast, eMarketerforecasts 6.41 million users by 2004, while Jupiter estimates the number at10.09 million. In the short term, the lack of network capacity will hindergrowth in Mexico’s internet user population, but as infrastructureenhancements begin to bear fruit, the user population should swellaccordingly.

IDC and Pyramid Research have estimated user numbers that are fairlyclose to eMarketer’s projections through 2002. For example, eMarketer’sestimate of 1.52 million active internet users in 2000 compares closely withIDC’s projection of 1.68 million and Pyramid’s forecast of 1.20 million. By2004, however, eMarketer projects a user base that exceeds the estimates ofboth IDC and Pyramid.

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Index of Charts

2000

2002

2004

2.2

5.2

10.1


Jupiter: Internet Users in Mexico, 2000, 2002, & 2004 (in Millions)

2000

2002

2004

2010

2.5

5.9

9.1

18.1


Morgan Stanley: Internet Users in Mexico, 2000–2004& 2010 (in Millions)

2000

2002

1.7

3.2


IDC: Internet Users in Mexico, 2000 & 2002 (in Millions)


143


Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2002

2004

1.2

2.6

4.3


Pyramid: Internet Users in Mexico, 2000, 2002, & 2004 (in Millions)

9.1

4.3

6.4

Morgan Stanley

Jupiter Research

IDC

Pyramid Research

eMarketer

5.9

5.2

3.2

2.6

3.2

2.5

2.2

1.7

1.2

1.5

Comparative Estimates: Internet Users in Mexico, 2000, 2002, & 2004 (in Millions)

200020022004

Source: Various, as noted; eMarketer, 2000

10.1


144


Demographic ProfileAccording to NetValue, 58% of Mexican users are male, which represents aslightly higher percentage in relation to Brazil. However, like Brazil,Mexico’s user population is young: 67% are age 34 and under, with 37%concentrated in the 15-24 segment. This figure is roughly analogous to the33% of Brazilian users that fall into the 18-24 segment.

In terms of internet experience, Mexico’s internet users have spent lesstime online than Brazil’s. The NetValue survey found that only 43% ofMexican internet users had been online for more than one year, whereasthe Media Metrix study revealed a figure of 73% in Brazil. By comparison,a 1999 Nazca Saatchi & Saatchi study found that on average, 42% of allLatin Americans and 52% of all Mexicans had been online for only oneyear or less. Note that NetValue findings are based on panel surveys ofhome users who have accessed the internet at least once per month. Newpanelists are added regularly, which may have an effect on the panel’sgender balance as well as the socioeconomic status and online experienceof panelists.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

15–2437.0%

65+1.0%14 and

under7.0%

25–3423.0%

35–4924.0%

50–649.0%

Note: May not add up to 100% due to rounding.Source: NetValue, 2000

NetValue: Internet Users in Mexico, 2000 (by Age)

Male 58%

Source: NetValue, 2000

NetValue: Internet Users in Mexico, 2000 (by Gender)

Female 42%


145


NetValue’s data reveals socio-economic division among Mexico’s internetusers, although the distribution is more balanced than in Brazil, whereMedia Metrix and IBOPE assign 63% to 80% of Brazilian internet users tothe top two strata. Note that the criteria the Mexican national marketingassociation uses to define socio-economic levels are different than thoseused in Brazil. The point-scoring scheme in Mexico is based on theeducational achievement and occupation of the head of household, theownership of consumer goods, the number of light bulbs and rooms in thehome (excluding bathrooms) and the number of domestic helpers.

NetValue finds only 46% of Mexican users at the same levels. Theremaining 54% belong to the third socioeconomic segment.

Mexican internet users spend most of their online time surfing the web,according to NetValue. Men and women spend nearly equal time on theseactivities, with the only major differences being that men prefernewsgroups by a margin of two to one (6.4% to 3.1%) and make greater useof instant messaging (43.1% to 36.2%). The study also found that only 32%of Mexicans use e-mail. However, NetValue does not include webmailservices (such as Hotmail) or proprietary mail services. Given the popularityof sites like MSN.com, Yahoo! and AOL among Mexican internet users,webmail and proprietary mail users probably account for a largepercentage of the country’s total e-mail users.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Less Than 6 Months31.3%

6 Months to 1 Yr.25.3%

More Than 1 Yr.43.3%

Note: May not add up to 100% due to rounding.Source: NetValue, 2000

NetValue: Internet Use in Mexico, 2000 (by Number of Years Online)

A/B Strata

C1 Stratum

C2 Stratum

46%

21%

33%


NetValue: Internet Users in Mexico by SocioeconomicStrata, 2000


146


In terms of frequency and duration, more men than women visit and spendmore time at gambling, auction and adult sites.

■ Gambling sites had a 12.8% reach among women and 23.9% amongmen; women spend less than one minute on average on gamblingsites, while men spend 3.2 minutes

■ Auction sites had a 8.6% reach among women and an average visitthat lasted 5.6 minutes; among men, the figures were 17.2% and 26.7minutes, respectively

■ Adults sites reached 23.5% of female users (16.9 minutes/visit) and51.2% of male users (83.5 minutes/visit)

Women, on the other hand, tend to spend more time on shopping sites thanmen. In part, these discrepancies may be a function of the fact that agreater percentage on the Mexican online population is male. They mayalso reflect cultural differences applicable to gender roles in Mexico.

As in Brazil, internet users in Mexico are migrating to non-domesticdomains. According to NetValue, MSN.com had the greatestreach–68%–among Mexican users, no doubt spurred in large part by thestrategic alliance between Microsoft and Telmex, the largest incumbenttelephone company and ISP in Mexico. What is interesting is that Mexicanspreferred the US, English-language versions of big brand sites such asMSN.com and yahoo.com to their Mexican, Spanish-language counterpartsby a significant margin. For example, the reach of yahoo.com, the secondmost visited site, was more than double that of yahoo.com.mx (66.9% to30.4%).

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Games

Newsgroups

Chat

File Transfers

Audio–Video

eMail

Instant Messaging

Surfing

1.0%

5.1%

13.7%

22.0%

27.0%

31.7%

40.3%

96.9%


NetValue: Mexican Internet Users Engaging in OnlineActivities, 2000


147


C. eCommerceIn the near term, Mexico’s underdeveloped infrastructure should keepe-commerce revenues modest. Online merchants will have to work toovercome Mexicans’ reluctance to buy products over the internet, and theymust continue to offer a variety of payment options until a greater portionof the population has a credit card or other forms of e-money. Telmex’snear monopoly on telecommunications service will also hampere-commerce growth in both the B2C and B2B segments, at least until2001-2002, when massive investments in infrastructure upgrades begin tobear fruit.

The range of e-commerce estimates for Mexico is broad, from the $270million forecast by Morgan Stanley Dean Witter to the $3.25 billionpredicted by Forrester Research for 2000. As Mexico reaches its period ofhyper-growth in 2003 (the first country in Latin America to do so,according to Forrester), e-commerce revenues will spike upwards to morethan $107 billion in 2004. In this context, eMarketer’s estimates fall towardthe middle of the pack.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$3.25

$6.60

$15.90

$42.26

$107.04


Forrester: eCommerce Revenues in Mexico, 2000–2004 (in Billions)

2000

2001

2002

2003

2004

$0.55 (15.3%)

$1.54 (16.0%)

$4.14 (20.0%)

$7.43 (19.0%)

$13.30 (20.0%)


eCommerce Revenues in Mexico, 2000–2004 (in Billions and as a % of Total Latin American eCommerce)


148


B2C eCommerceMexicans regard shopping as a social (and often family-oriented) activity,as do many other Latin Americans. As such, seeing and being able tohandle actual products, talking to salespeople and gathering information inperson are rather important components of the shopping experience.Consequently, these cultural factors may impede the development of e-commerce in the short term.

Less expensive computers, offered with free internet access by leadingISPs, may help to increase PC and internet penetration rates, which should,in turn, offer a boost to consumer-based e-commerce. However, slowconnection speeds, which prevail across Mexico, may frustrate users whovisit image-rich online shopping sites.

Estimates from other research firms show a relatively high degree ofconvergence, with Forrester Research’s prediction coming in somewhathigher than others. eMarketer’s forecasts are at the upper end of thespectrum, but growth rates are consistent with those reported by otherresearch firms.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

2004

$0.11

$0.28

$0.62

$0.97

$1.46


B2C eCommerce Revenues in Mexico, 2000–2004 (in Billions)

2000

2001

2002

2003

$0.27

$0.65

$1.21

$1.94


Morgan Stanley: eCommerce Revenues in Mexico, 2000–2003 (in Billions)


149


TaxationLike Brazil, Mexico does not currently have any tax legislation specific toonline commerce. According to the Economist Intelligence Unit, e-commerce transactions are classified by the underlying activity. Therefore,B2C transactions, for example, are considered retail activities.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

$0.12

$0.27

$0.51

$0.69


Morgan Stanley: B2C eCommerce Revenues in Mexico, 2000–2003 (in Billions)

$0.23

$0.47

$1.13

$3.00

2000

2001

2002

2003

2004 $7.59


Forrester: B2C eCommerce Revenues in Mexico, 2000–2004 (in Billions)

$0.08

$0.17

$0.35

$0.64

2000

2001

2002

2003

2004 $1.05


Jupiter: B2C eCommerce Revenues in Mexico, 2000–2004 (in Billions)


150


Alternative Payment MethodsLike Brazil, Mexico has two e-money pilot programs under way, oneassociated with Visa and promoted by a group of banks, and the other withInbursa, a Mexican bank. Both systems allow cardholders to load cash fromtheir bank accounts onto their cards using home-based PCs. Between thetwo systems, 27,500 cards had been issued by year-end 1999. As in Brazil,the average daily the average transaction value is low, although again, it isconsistent with average transaction values reported by other countriesaround the world, including Canada, Hong Kong and several WesternEuropean nations. Cardholders can use their “electronic purses” atparticipating merchants, vending machines and more than 1,000 publicphones.

Residential DeliveryAccording to the “shopping test” that BCG and Visa conducted on 40 e-commerce sites, Mexico had the worst delivery record: only 35% ofproducts arrived on time.

Some consumer e-commerce sites, like Decompras, offer their ownnationwide delivery services in addition to the services of internationallogistics carriers like UPS and DHL.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

BIS: Number of eMoney Products in Mexico, 1999Name of System Type Number of Cards Average

Issued/ Number of Value ofHome PC Users TransactionsUsing Product

VISA Cash Card–based 25,000 $1.30

Monedero Electronico Inbursa Card–based 2,500 $0.37 (vending

machines)$4.39 (merchants)

Source: Bank for International Settlements (BIS), 2000


151


Consumer Attitudes and BehaviorMUND, a Mexican research firm, estimates that only 13% of Mexicaninternet users have purchased goods or services online. Music, software,books, hardware and event tickets were the top consumer categories.

A recent survey conducted by Greenfield Online Mexico for Mexico’sinternet advertising and commerce association, AMIPCI (using pop-ups orbanners on 15 of the association’s member sites), found that 36% ofsurveyed internet users had made some kind of online purchase. The list ofthe most popular online products corresponds closely to the results of theMUND study, with software or hardware the most popular, followed bycompact discs, books, home electronics, event tickets, magazinesubscriptions, travel and ticket purchasing, cars and accessories, videos andoffice furniture.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Office Furniture

Videos

Cars/Auto Parts and Accessories

Travel/Ticket Purchasing

Magazine Subscriptions

Event Tickets

Home Electronics

Books

CDs

Hardware/Software

25%

28%

28%

29%

31%

33%

37%

40%

41%

51%

Source: Greenfield Online/AMIPCI, 2000

AMIPCI/Greenfield: % of Consumers Buying Products Online in Mexico, by Product Category


152


The AMIPCI report also revealed that Mexicans, like Argentines, are morelikely to use the internet to compare prices and research availability of theirfavorite products than to buy them. For example, of the 41% of internetusers who logged on to check the price of a compact disc, only 10% boughtthe CD online, while 28% made their purchase in a traditional brick-and-mortar store. Even large, well-respected retail chains like Sanborns arehaving limited success selling goods over the internet.

Privacy and SecurityAlong with the need for personal interaction, consumers in Mexico, as inother Latin American countries, have concerns about the security of onlinetransaction environments. Mexico (along with Brazil) is one of the leadersin experimenting with smart-card technology. Mexican credit card issuersexpect to replace magnetic-strip debit and credit cards with smart cardsover the next five years. Efforts must be made on several fronts to raiseoverall confidence and comfort levels of Mexican consumers about buyingonline. A MUND survey found that only 46% of Mexican consumers wereconfident about buying on the internet.

Businesses that offer one-hour delivery of items like snacks and moviesand which allow consumers to pay for their purchases in cash have beensuccessful in the consumer e-commerce market.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

MUND: B2C eCommerce in Mexico, 2000 Ranking Product

1st Music

2nd Software

3rd Books

4th Hardware

5th Event Tickets

Source: MUND, 2000

MUND: Mexican Confidence in the Security of BuyingOnline

No 54%

Source: MUND, 2000

Yes 46%


153


B2B eCommerceThe large number of US firms operating in or doing business with Mexicanindustry bodes well for e-commerce, particularly in the B2B sector.Mexico’s assembly industry, particularly in the automotive and electronicssegments, is closely integrated with US and Asian supply operations thatdo much of their procurement online. As other global components of thesupply chain become digitized, the Mexican divisions have been compelledto follow suit. In any case, making e-commerce work well in a country likeMexico requires overcoming serious obstacles. Antiquated back officecomputer systems, inefficient distribution networks, and pervasive creditcard fraud are enough to dissuade even the most ambitious entrepreneursfrom moving their businesses online.

As with Brazil, assessments of Mexico’s potential for B2B e-commerce varywidely, with some remarkably optimistic and others tending to be quitepessimistic. This lack of consensus in part accounts for the divergence inB2B e-commerce forecasts. Indeed, Mexico’s proximity to and strong tieswith US markets may in part account for why firms such as Forresterpredict greater B2B revenues in Mexico than even in Brazil, which isgenerally considered the economic powerhouse of Latin America.

Cautious optimism is warranted given that Mexican companies areamong the pioneers in building digital exchanges and marketplaces and areboth well-positioned and sufficiently capitalized to help make e-procurement a reality, in Mexico as well as across the region.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

$0.44

$1.26

$3.52

$6.47

2000

2001

2002

2003

2004 $11.84


B2B eCommerce Revenues in Mexico, 2000–2004 (in Billions)

2000

2001

2002

2003

$47.19

$76.68

$101.45

$151.39


Computer Economics: B2B eCommerce Revenues in Mexico, 2000–2003 (in Billions)


154


Business Internet PenetrationInfoAmericas estimates that around 85% of Mexican companies have acomputer in their purchasing department and/or upper management. Justunder 80% of purchasing departments have internet access, but only 20%have actual experience with e-procurement.

Marketplaces, Auctions and ExchangesCementos Mexicanos (Cemex), the world’s third-largest cement company, isexpanding its integrated global operations with new vertical procurementportals. It is building on its strength in the construction business bylaunching ConstruMix portals in major markets around the world. The siteswill bring together suppliers of a full range of materials with end users inthe architectural, design, construction and contracting business. Cemex hasalso joined with Grupo Industrial Alfa, another Mexican conglomerate,Brazilian cement maker Votorantim and Bradespar, Banco Bradesco's non-financial arm to form Latinexus, a Latin-wide e-marketplace for indirectgoods.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

$0.15

$0.38

$0.70

$1.25


Morgan Stanley: B2B eCommerce Revenues in Mexico, 2000–2003 (in Billions)

$3.02

$6.13

$14.77

$39.26

2000

2001

2002

2003

2004 $99.45


Forrester: B2B eCommerce Revenues in Mexico, 2000–2004 (in Billions)


155


D. eAdvertisingAs in other leading Latin American media markets, television dominatesadvertising spending in Mexico. Morgan Stanley Dean Witter predicts thatinternet advertising expenditures will represent only 0.5% of totalspending in 2000. However, they should grow precipitously over the nextfew years, particularly after 2002, when upgrades to thetelecommunications infrastructure will make serving ad-rich web pagesmore viable.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

2000

2001

2002

2003

$13

$27

$66

$179


Morgan Stanley: Online Advertising Expenditure in Mexico, 2000–2003 (in Millions)

$28

$61

$127

$241

2000

2001

2002

2003

2004 $422


Forrester: Online Advertising Expenditure in Mexico, 2000–2004 (in Millions)


156


E. eMobilePent-up demand for mobile phone service has resulted in saturation of thenation’s wireless network. Calling Party Pays and prepaid monthly serviceaccount in part for the explosive growth in the number of wireless users inMexico. However, with a majority of cellular phones still operating onanalog technology, most Mexican users will not be able to access theinternet on their mobile devices, at least not until telephone operatorscomplete upgrades to the cellular network.

Telmex, which still enjoys near-monopoly status through its wirelessunit, Telcel, is a formidable barrier to entry to the Mexican wireless market.Competitors are looking to local markets and fixed-wireless networks as away of winning market share from the incumbent Telmex, althoughsubsidiaries of large multinationals like Telefonica, AT&T and Bell Atlantic(now Verizon) are also poised to make inroads.

Mobile Subscriptions, Users and PenetrationAccording to Mexico’s telecommunications regulator, COFETEL, thenumber of mobile phone subscribers has now surpassed the number offixed telephone lines installed. Likewise, wireless teledensity now exceedsfixed-line teledensity, and the disparity should accelerate as more operatorsenter the market and network upgrades take effect. However, COFETELprojects a decline in the number of subscribers to paging services. Ascellular phones and other wireless devices become more sophisticated,incorporate more features and come down in price, pagers may become lessattractive to consumers. COFETEL, like Brazil’s ANATEL, assembles itsestimates based on data provided by wireless operators.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Wireless

Fixed Telephones

Paging

13.1

12.3

0.74

Source: COFETEL, 2000

COFETEL: Wireless Subscribers, Fixed–Line Telephonesand Paging Subscribers in Mexico, 2000 (in Millions)


157


Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

COFETEL

The Strategis Group

Yankee Group

ITU (1999)

13.1

12.2

9.9

7.7


Comparative Estimates: Wireless Subscribers in Mexico, 2000 (in Millions)

9.9 (10.1%)

13.1 (13.2%)

16.3 (16.2%)

19.3 (19.0%)

2000

2001

2002

2003

2004 22.2 (21.6%)


Yankee Group: Wireless Subscribers In Mexico,2000–2004 (in millions and as % of population)

Wireless

Fixed-Line Telephones

13.3%

12.5%

Source: COFETEL, 2000

COFETEL: Wireless Subscribers and Fixed-LineTelephones in Mexico, 2000 (% of population)


158


X


I Overview



IV eCommerce

V eAdvertising

VI eFinance




X Country Reviews: Other Countries 159

A. Chile 160

B. Colombia 165

C. Venezuela 167

Index of Charts


159



160


A. Chile

With its dynamic, largely unrestricted and stable economy, its high (for theregion) GDP per capita, high PC and credit card penetration rates and well-developed telecommunications infrastructure, Chile is well-positioned tosupport growing internet usage and the development of e-commerce. TheChilean government is an active participant in the nation’s digitaleconomy, and since October 1999, has required all departments topurchases goods and services online through its procurement portal. Chile’stax collection system is one of the most effective in the region, and taxcollection rates are high in comparison to neighboring countries. 25% of all1999 tax returns were submitted over the internet in April-May 2000.Nevertheless, like many of its neighbors, Chile currently has no legislationthat applies specifically to online commerce.

Internet usage is growing rapidly according to all accounts. TheSubsecretariat of Telecommunications over the past few years has made thefollowing estimates:

■ 215,000 internet users in 1998■ In 1999, 750,000 internet users■ At the end of the first quarter of 2000, there were more than

1,000,000 usersEstimates from local ISPs also the put the number of users in the 1-1.2million range. A number of ISPs introduced free internet access in early2000, which, given the relatively low access charges, has provided a majorimpetus to internet use. According to research by the Santiago Chamber ofCommerce (CCS), when using a free access provider, 15 hours of internetuse cost $15.40 in telephone charges as of the first quarter of 2000 and 20hours per month cost approximately $21.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

QuickStats: Chile, 2000Total Population (millions)1 15.15

% of Population Living in Urban Areas (1999)2 85%

Percent of Population Living on $2.00/Day* or Less (1994)2 20.3%

GDP ($US billions)3 $74.66

GDP PPP (1999) ($US billions)4 $185.1

GDP Per Capita PPP (1999) ($US thousands)4 $12,400

% of Population with a Credit Card5 22%

Internet Hosts6 51,380

PCs/100 Inhabitants (1999)7 6.66

Main Telephone Lines/100 Inhabitants8 21.10

Mobile Cellular Subscribers/100 Inhabitants8 18.80

Active Internet Users (millions)9 1.03

*1993 prices. Sources: 1US Census Bureau, 2000; 2World Bank, 2000; 3IMF, 2000; 4CIA World Factbook, 2000; 5Morgan Stanley Dean Witter, 1999; 6Network Wizards, 2000; 7ITU, 2000; 8Subtel, 2000; 9Subtel/Cámera de Comercio de Santiago, 2000


161


Falling telephone access costs (and the availability of low-cost off-peakrates) and ISP charges have helped to boost internet adoption rates.According to Morgan Stanley Dean Witter, the majority of users access theinternet from home, which is consistent with regional trends. Businesspenetration rates for PCs and PCs with internet access are low (albeitconsistent with the regional average):

■ 10% of the workforce has access to a PC■ 3% of the workforce has internet access■ 31% of workplace PCs have an internet connection, which is high for

Latin AmericaCCS research puts workplace connection considerably higher, at 42%,noting that connection rates increase according to the size of the business.Micro-enterprises and small businesses are less connected to internet, andfewer have a web site, while CCS estimates that 93% of large businesses(those with 200 or more employees) have internet access. Given therelatively high rate of business internet penetration and the government’sproactive stance regarding online procurement, the potential for B2B andB2C is substantial.

eCommerce in both the business and consumer segments has also grownquickly. According to ebusinessforum.com, the nation’s largest departmentstores chains are currently the most successful B2C operations. Banks,insurance companies and brokerage houses are moving to bring theiroperations online and to make their services available over the wirelessinternet as well. Top consumer products include:

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Music

Books

Electronics Goods and Kitchen Equipment

Household Goods

Computer Goods

21%

17%

17%

12%

11%

Source: Santiago Chamber of Commerce, 2000

Santiago Chamber of Commerce: Top Consumer Categories in Chile, 2000


162


CCS research, which also surveyed 56 online retailers, found that ■ 77% provide nationwide coverage■ 61% offer online payment options■ 47% maintain secure online transaction environments

According to the survey, average delivery time has been just over two days,aided in no small part by Chile’s compact geography.

Nevertheless, despite the many promising indicators, Chile is notimmune to the phenomenon of the digital divide. In fact, incomedistribution in Chile is among the most skewed in Latin America, even if acomparatively small portion of the population lives at or below the povertyline. Given this pattern of uneven income distribution that prevails in Chile(as well as across the region), the costs of buying a computer or renting atelephone line are still beyond the reach of a large segment of thepopulation.

Chile’s population, like that of most Latin American countries, is heavilyurbanized. According to World Bank estimates, 85% of the country’s 15million people live in urban areas. Moreover, unlike Brazil and Mexico,which have several cities with populations over one million, Chile’spopulation is further concentrated in and around one city: Santiago, thenation’s capital.

This phenomenon of centralization is common in Latin America, andparticularly evident in the region’s smaller nations. On a national level, thismeans that the country’s technology infrastructure is as unevenlydistributed as its wealth. According to a recent study by the CCS, 57% ofChile’s fixed-line telephones and 58% of mobile handsets are concentratedin the capital city. Meanwhile, the top three socioeconomic strata, whichrepresent only 26% of households, account for nearly 70% of Chile’sinternet connections.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

World Bank: Income Distribution in Chile, 2000% Income Controlled By: Chile

Lowest 20% 3.5

Second 20% 6.6

Third 20% 10.9

Fourth 20% 18.1

Highest 20% 61.0

Highest 10% 46.1

Source: World Bank, 2000; figures may not add up to 100% due to rounding.


163


Similar patterns obtain in the realm of e-commerce. The capital citygenerates 80% of the nation’s B2C e-commerce revenues, which isunderstandable given the concentration of population in Santiago.However, the CCS also found that small, medium-sized and large firms(those with ten or more employees), which account for approximately 18%of the nation’s 500,000 businesses, generate almost 99% of Chile’s e-commerce revenues. By contrast, the country’s 400,000 micro-establishments (those with 1 to 9 employees) account for only 1% of onlinesales.

The Chilean government is working proactively on several fronts to closethe nation’s digital divide. The Subsecretariat of Telecommunications isinvesting in community “telecenters” designed to provide internet access tolow-income segments of the population. In addition, the Ministry ofEducation has plans to connect 100% of Chile’s secondary schools and 50%of all schools to the internet by 2005. Finally, the government has set asidecredit for micro- and small enterprises targeted specifically for thepurchase of computer equipment, internet connections and training in newtechnology. In this capacity, the government is both capitalizing on andfacilitating the growth of Chile’s digital economy.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Concentration in the Capital City

% of Population

% of GDP

% of Internet Users

% of eCommerce

40%

48%

57%

80%

Source: CCS, 2000


164


WirelessAlthough small in size and population, Chile boasts one of Latin America’smost dynamic telecommunications sectors. The government began itsprivatization program in the late 1980s, well ahead of most countries in theregion, and fully deregulated the market in 1994. Today, it is morecompetitive than most. According to figures released by theTelecommunications Undersecretary (Subtel), Chile had 2.86 million mobileusers by the end of the second quarter of 2000, of which approximately60% were on prepaid plans and 40% on contracts with cellular operators.Another factor behind the explosive growth in wireless subscriptions wasthe introduction of Call Party Pays in early 1999, which substantiallyreduced wireless tariffs.

Because Chile’s wireline infrastructure is relatively advanced, fixed-lineteledensity still exceeds wireless teledensity, although the number ofwireless subscribers is growing at a much faster rate than the number ofinstalled fixed lines. However, on a national level, the country’s technologyinfrastructure is unevenly distributed. According to a recent study by theCCS, 57% of Chile’s fixed-line telephones and 58% of mobile handsets areconcentrated in the capital city.

Wireless Subscriptions, Users and Penetration

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

Wireless

Fixed Telephones

18.8

21.1

Source: Subtel, 2000

Subtel: Wireless Subscribers and Fixed–Line Telephones per 100 Inhabitants in Chile, 2000

The Strategis Group

Subtel

ITU (1999)

2.89

2.86

2.26

Sources: various, as noted, 2000

Comparative Estimates: Wireless Subscribers in Chile,2000 (in Millions)

Wireless

Fixed Telephones

2.86

3.21

Source: Subtel, 2000

Subtel: Wireless Subscribers and Fixed–Line Telephones in Chile, 2000 (in Millions)


165


B. Colombia

Colombia’s long-running guerrilla wars and the endemic problemsassociated with drug trafficking inject unique elements of uncertainty intothe country’s economy, presenting local and national governments as wellas investors with significant challenges. At the same time, the internetsector has considerable potential. At 16.04 main telephone lines per 100inhabitants, teledensity in Colombia exceeds that of both Brazil andMexico. The telecommunications infrastructure is relatively modern andthe market is becoming increasingly competitive, although multinationalcorporations may balk at making substantial investments due to the risksinvolved. The Yankee Group forecasts 2.08 million cellular subscribers in2000, rising to 7.38 million in 2006. By comparison, the Strategis Groupreported 1.69 million subscribers as of the second quarter of 2000. Thepopulation is the third largest in Latin America, and is highly urbanized.There are a number of large commercial centers both along the coast in thehighlands.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

QuickStats: Colombia, 2000Total Population (millions)1 39.69









Main Telephone Lines/100 Inhabitants (1999)7 16.04

Mobile Cellular Subscribers/100 Inhabitants (1999)7 7.54

Active Internet Users (millions) (1999)7 0.60

*1993 prices. Sources: 1US Census Bureau, 2000; 2World Bank, 2000; 3IMF, 2000; 4CIA World Factbook, 2000; 5Morgan Stanley Dean Witter, 1999; 6Network Wizards, 2000; 7ITU, 2000


166


As in Chile, the government has assumed a proactive role in stimulatinginternet usage and has taken legislative steps to facilitate onlinetransactions. For example, in 1999, it passed legislation that validatesdigital signatures for online purchases, making Colombia one of the fewcountries in the region with this type of protective regulation. Theadministration is undertaking initiatives to lower internet access costs(which, as of 1999, were among the highest in Latin America) in an effortto bring a larger portion of the population online. Current estimates putinternet penetration around 1% of the population. The ITU reported600,000 users as of year-end 1999. IDC and Jupiter Research estimate556,000 and 832,000 users in 2000, respectively. Although Colombia doesnot have tax legislation specific to e-commerce, its tax rates, both personaland corporate, are among the highest in Latin America, according to theEconomist Intelligence Unit (EIU).

Beyond the political and economic uncertainty resulting from internalcivil strife and drug trafficking, other significant barriers to e-commerceremain. The country is still recovering from a severe recession. Internet andcredit card penetration rates are low, as is per capita GDP. Moreover,consumers have little trust in the security of online transactions. Thisconcern may be valid, given the lack of secure servers in Colombia,particularly among local B2C firms. InfoAmericas estimates that localinvestment in online sales technology and software in 1999 was $7 million,fourth in Latin America, but well behind the $110 million spent byBrazilian firms. As a result, InfoAmericas has found that 66% ofColombians prefer to buy from foreign firms, well above the LatinAmerican average of 59%. Banks were among the first movers into theonline space, with Bancolombia initiating limited internet banking as earlyas 1996; the Yankee Group estimates that by the end of 1999, 3% of all ofBancolombia’s transactions were web-based. According to theebusinessforum.com, an internet based transaction costs the bank sevencents, while teller-based services cost more than $1. Conavi (CorporaciónNacional de Ahorro y Vivienda), Colombia’s other leading e-bank,launched its SET protocol-based bill payment system in early 1999. As inBrazil, banks are capitalizing on their first-mover advantage by partneringwith and bringing online local retailers. The banks guarantee the securityof the transactions.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts


167


C.Venezuela

With fixed-line teledensity at approximately 11% and a relatively low percapita GDP, Venezuela does not present prime conditions for supportinginternet usage and e-commerce. Internet access charges are high, althoughtelephone companies do offer a small discount to customers dialing in totheir ISP. Access prices may decline as the fixed-line market becomes moreopen to competition at year-end 2000. The ITU reported approximately400,000 internet users in Venezuela as of year-end 1999. IDC and JupiterResearch have offered similar estimates for the number of internet users in2000: 596,000 and 542,000, respectively. Jupiter, however, predicts muchsteeper growth, with 2.07 million users forecasted for 2003 and 3.79million for 2005. By contrast, IDC estimates that the number of users willincrease to 1.27 million in 2003.

Wireless teledensity, on the other hand, is high for the region, at just over14%. The Strategis Group reported 4.53 million wireless subscribers as ofthe second quarter of 2000. Venezuela was one of the first countries in theregion in which mobile phone users outnumber those who depend on afixed-line connection. Therefore, delivering content and services over thewireless web may be a more promising avenue than the PC-based internet.Early in 2000, CANTV, the telecommunications giant, launched a web sitein conjunction with StarMedia to serve its Movilnet wireless customers.Venezuelan media groups are also active in providing internet content. Forexample, the Cisneros Group owns a stake in AOL-Latin American andrecently purchased the Argentina portal, El Sitio.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

QuickStats: Venezuela, 2000Total Population (millions)1 23.54









Main Telephone Lines/100 Inhabitants (1999)7 10.91

Mobile Cellular Subscribers/100 Inhabitants (1999)7 14.34

Active Internet Users (millions) (1999)7 0.40

*1993 prices. Sources: 1US Census Bureau, 2000; 2World Bank, 2000; 3IMF, 2000; 4CIA World Factbook, 2000; 5Morgan Stanley Dean Witter, 1999; 6Network Wizards, 2000; 7ITU, 2000


168


As in many other Latin American markets, banks in Venezuela have beenamong the first movers in offering online services. At present, Venezuelahas no legislation specific to e-commerce. According toebusinessforum.com, tax evasion is endemic in the country, and thegovernment is not likely to tax the already limited e-commerce market. Theoccasionally mercurial and flamboyant president, Hugo Chavez, shows allsigns of being an ardent promoter of the internet, and has indicated that hewill facilitate the expansion of internet usage and e-commerce throughprotective legislation (for example, digital signatures for documenttransfers and online purchases) and by introducing public internet kiosksthat will be accessible with prepaid cards.

Methodology

Overview



eCommerce

eAdvertising

eFinance

Argentina

Brazil

Mexico

Other Countries

Index of Charts

A


I Overview



IV eCommerce

V eAdvertising

VI eFinance





Index of Charts 169


169



170


Index of ChartsWelcome to eMarketer


I Overview


A. Identifying Potential Internet Users

Population of Latin America and the Caribbean, 2000 (by country)

World Bank: Population Living in Urban Areas in Argentina, Brazil, andMexico,1999

Population 14+ of Three Largest Latin American Internet Markets,2000–2004 (in millions)

Age Breakdown of Brazil, Mexico, and Argentina, 2000

World Bank: Population Living on $2.00/Day* or Less in Selected LatinAmerican Countries

World Bank: Income Distribution in Selected Latin American Countries andthe US, 2000

Average GDP per Capita, Average per Capita for Richest 20% and AverageGDP for Richest 10%: Argentina, Brazil, Mexico, and the US, 2000

Potential Internet Users in Latin America, 2000–2004 (in millions)

B. Telecommunications Infrastructure

ITU: Telephone Lines per 100 People in Argentina, Brazil, and Mexico, 1999

Morgan Stanley: Telephone Lines per 100 People in Latin America, 2000–2004

Morgan Stanley: Number of Telephones in Latin America, 2000–2004 (inmillions)

World Bank: Number of Telephones in Latin America, 2000–2004, & 2010(in millions)

ITU: Home and Business Telephone Costs in Argentina, Brazil and Mexico,1998–1999

IDC: Telephone and Access Fees Reported by Internet Users in Argentina,Brazil, and Mexico, 2000

ITU: Latin American Cellular Subscribers by Technology, 1998

EMC: Worldwide GSM Subscribers, 2000–2004 (in millions)

Baskerville Communications: Next-Generation Wireless Technology inLatin America by Number of Users, 2000–2004 (in millions)

Yankee Group: Wireless Technology in Latin America by % of Users,2000–2004 (in millions)

C. Cable Television Infrastructure

Morgan Stanley Number of Cable TV Subscribers in Latin America,2000–2004 (in millions)

Morgan Stanley: Households with Cable TV in Latin America, 2000–2004

Morgan Stanley: Cable TV Subscribers among Telephone Owners inArgentina, Brazil, Mexico and the US, 2000

D. PC Infrastructure

ITU: PCs per 100 People in Argentina, Brazil and Mexico, 1999

Morgan Stanley: PC Penetration in Latin America, 2000–2004

Jupiter: PC Penetration in Argentina, Brazil and Mexico, 2000–2004

Index of Charts


171


Jupiter: Households with PCs in Argentina, Brazil and Mexico, 2000–2004(in millions)

Morgan Stanley: Household Penetration of PCs in Latin America,2000–2010

Morgan Stanley: Workforce with PC Access in Latin America, 2000–2010

Morgan Stanley: Business PCs with Internet Connection in Latin America,2000–2010

Morgan Stanley: Internet Subscribers by Access Type, 2000

IDC: Internet Access Speeds in Argentina, Brazil and Mexico, 2000

E. Internet Infrastructure

ITR: Regional Average Response Time, Packet Loss (Past 30 Days), andNumber of Routers, 2000

Network Wizards: Internet Hosts in Brazil, Mexico and Argentina,1995–July 2000

VilaWeb: Webpages in English and Other Languages (in millions)


A. Internet Users

Internet Users in Latin America, 2000–2004 (in millions and % of worldtotal)

Internet Users in Latin America, 2000–2004 (in millions)

Concentration of Internet Users in Latin America, 2000 & 2004 (in millionsand % of Latin American internet users)

Internet Users in Latin America, 2000–2004 (as a % of population 14+)

Morgan Stanley: Latin American Households with Internet Access, 2000,2002 and 2004

Internet Users in Latin America, 2000–2004 (as a % of top 15% ofpopulation 14+)

Morgan Stanley: Internet Subscriptions in Latin America, 2000–2004 (inmillions)

Comparative Estimates: Internet Users in Latin America, 2000–2004 (inmillions)

Comparative Estimates: Internet Users in Latin America, 2005 (in millions)

B. Usage and Demographics

Internet Users in Latin America, 2000 (by gender)

Mean Age of Population and of Internet Users in Latin America,1999–2000

Morgan Stanley: Latin American Internet Users by Location of Access,2000, 2002 and 2004

Latin American Internet Users by Location of Access, 2000–2004 (inmillions)

TGI Latina: Latin American Internet Users by Location of Access, 2000

Morgan Stanley: Workforce with Internet Access in Latin America,2000–2010

TGI Latina: Internet Activities of Survey Respondents in the Previous 30Days

C. Wireless Users and Penetration

Comparative Estimates: Wireless Subscribers in Latin America,2000–2004 (in millions)

Index of Charts


172


Gartner: Worldwide Cellular Market, 2000 (as a % of total cellular phonesinstalled)

Comparative Estimates: Mobile Phone Penetration in Latin America,2000–2004

ITU: Cellular Mobile Subscribers per 100 Inhabitants and as % of TotalTelephone Subscribers in Argentina, Brazil and Mexico, 1999

Sanford C. Bernstein: Handset Sales in Latin America, 2000–2004 (inmillions and as a % of total worldwide sales)

Yankee Group: Changes in Wireless Rates for Selected Markets,1999–2000

Dataquest: Internet-Enabled Mobile/Handheld Computers in LatinAmerica, 2000–2003 (in millions)

Ovum: Worldwide Wireless Internet Users, 2000–2004 (in millions)

Strategis Group: Wireless Data Users in Latin America by Technology,2000–2007 (in millions)

IV eCommerce

A. Total eCommerce


Worldwide eCommerce Distribution by Region, 2000 (in billions)

Worldwide eCommerce Distribution by Region, 2000–2004


eCommerce Distribution in Latin America, 2000 & 2004 (in billions)

Forrester: eCommerce in Latin America, 2000–2004 (in billions)

IDC: eCommerce in Latin America, 2000–2003 (in billions)

Morgan Stanley: eCommerce in Latin America, 2000–2003 (in billions)

B. B2C eCommerce

B2C eCommerce in Latin America, 2000–2004 (in billions)

B2C eCommerce in Latin America, 2000–2004 (in Billions and as a % ofTotal Latin American eCommerce )

IDC: B2C eCommerce in Latin America, 2000–2003 (in billions)

Jupiter: B2C eCommerce in Latin America, 2000–2004 (in billions)

Forrester: B2C eCommerce in Latin America, 2000–2004 (in billions)

Morgan Stanley: B2C eCommerce in Latin America, 2000–2003 (in billions)

BCG/Visa: Top B2C Categories in Latin America, 2000 (in millions)

Morgan Stanley: Population with Credit Cards in Argentina, Brazil andMexico, 2000

D'Alessio/Harris: Preferred Forms of Payment in Latin America

e-Conomia: Latin American Consumer Fears about Online Credit Card Use

InfoAmericas: Investment in eSales Technology and Software in SelectedLatin American Countries, 1999 (in millions)

InfoAmericas: Online Spending Going to Domestic and Foreign Sites inSelected Latin American Countries, US and Europe, 2000

C. B2B eCommerce

B2B eCommerce in Latin America, 2000–2004 (in billions)

B2B eCommerce, 2000–2004 (in billions and as a % of Total Latin AmericaneCommerce)

Computer Economics: B2B eCommerce in Latin America, 2000–2003 (inbillions)

Index of Charts


173


Forrester: B2B eCommerce in Latin America, 2000–2004 (in billions)

Goldman Sachs: B2B eCommerce in Latin America, 2001–2004 (in billions)

Morgan Stanley: B2B eCommerce in Latin America, 2000–2003 (in billions)

IDC: B2B eCommerce in Latin America, 2000–2003 (in billions)

DHL Worldwide: Global eCommerce Barriers Cited by CompaniesWorldwide, 2000

InfoAmericas: Delivery Coverage of UPS and DHL in Selected LatinAmerican Countries, 2000

D. mCommerce

Jupiter: Worldwide Mobile Commerce Revenues, 2000–2005 (in billions)

Ovum: Worldwide Mobile Commerce Revenues, 2000–2004 (in billions)

V eAdvertising

Total Latin American On- and Offline Advertising Expenditure, 2000–2004(in billions and as % of total worldwide advertising expenditure)

Zenith Media: Latin American Advertising Expenditure, 2000–2003 (inbillions and as % of worldwide total)

Zenith Media: Top Latin American Countries by Advertising Spending,2000 (in billions)

Latin American Online Advertising Expenditure, 2000–2004 (in millions)

Latin American Online Advertising Expenditure, 2000–2004 (as a % ofWorldwide Total and Non-US Worldwide Ad Expenditure)

Comparative Estimates: Latin American Online Advertising Expenditure,2000–2004 (in millions)

Morgan Stanley: Latin American Online Advertising Expenditure,2000–2003 (in millions)

Jupiter: Latin American Online Advertising Expenditure, 2000–2004 (inmillions)

Forrester: Latin American Online Advertising Expenditure, 2000–2004 (inmillions)

TGI Latina: Latin American Internet Users Clicking on Ads, 2000 (by timeonline in past 30 days)

Ovum: Worldwide Mobile Advertising Expenditure, 2004 (in millions)

VI eFinance

A. eBanking

TowerGroup: Projected IT Spending on Wireless Financial ServicesWorldwide, 2000 & 2005 (in millions)

B. eInvesting

Goldman Sachs: Global Asset Allocation, 2000 (in billions)

C. Wireless Financial Services

TowerGroup: Projected Users of Wireless Financial Services, 2000 & 2005(in millions)

TowerGroup: Projected IT Spending on Wireless Financial ServicesWorldwide, 2000 & 2005 (in millions)


QuickStats: Argentina, 2000

A. Overview

B. Internet Users and eDemographics

Index of Charts


174


Internet Users in Argentina, 2000–2004 (in millions and as a % ofpopulation 14+)

Morgan Stanley: Internet Users in Argentina, 2000–2010 (in millions)

Jupiter: Internet Users in Argentina, 2000– 2004 (in millions)

IDC: Internet Users in Argentina, 2000–2003 (in millions)

Pyramid: Internet Users in Argentina, 2000–2004 (in millions)

Comparative Estimates: Internet Users in Argentina, 2000, 2002 & 2004 (inmillions)

Prince: Internet Users in Argentina, 2000 (by gender)

Prince: Years of Internet Use in Argentina, 2000 (by age, gender andsocioeconomic strata)

Prince: Internet Users in Argentina by Socioeconomic Strata, 2000

C. eCommerce

eCommerce Revenues in Argentina, 2000–2004 (in billions and as a % oftotal Latin American e-commerce)

Forrester: eCommerce Revenues in Argentina, 2000–2004 (in billions)

Morgan Stanley: eCommerce Revenues in Argentina, 2000–2003 (inbillions)

B2C eCommerce Revenues in Argentina, 2000–2004 (in millions)

Forrester: B2C eCommerce Revenues in Argentina, 2000–2004 (inmillions)

Jupiter: B2C eCommerce Revenues in Argentina, 2000–2004 (in millions)

Morgan Stanley: B2C eCommerce Revenues in Argentina, 2000–2003 (inmillions)

D’Alessio/Harris: Online Payment Method vs. Payment Preference inArgentina, 2000

Prince: Consumers Buying Products Online in Argentina, 2000

American Express: Anticipated Online Purchases in Argentina, 2000

D’Alessio/Harris: Online Product Research vs. Purchases in Argentina,2000

Prince: Consumer Benefits of Buying Online, 2000

Comparative Estimates: Foreign vs. Domestic Online Spending inArgentina, 2000

Prince: Reasons for Not Buying Online in Argentina, 2000

D’Alessio/Harris: Reasons for Not Buying Online in Argentina, 2000

Comparative Estimates: B2B eCommerce Revenues in Argentina,2000–2004 (in billions)

Prince: Argentine Businesses with a Website, 2000–2001

Prince: Large Businesses Transacting Online, 2000–2001

Prince: SMEs Transacting Online, 2000–2001

D. eAdvertising

Morgan Stanley: Latin American Online Advertising Expenditure,2000–2003 (in millions)

E. eMobile

Yankee Group: Millions of Wireless Subscribers and Subscribers per 100Inhabitants, 2000–2004

InfoAmericas: Wireless and Fixed–Line Teledensity in Argentina,2000–2003

Index of Charts


175



QuickStats: Brazil, 2000

A. Overview


Internet Users in Brazil, 2000–2004 (in millions and as a % of population14+)

Morgan Stanley: Internet Users in Brazil, 2000–2004 and 2010 (in millions)

Jupiter: Internet Users in Brazil, 2000–2004 (in millions)

IDC: Internet Users in Brazil, 2000–2003 (in millions)

Pyramid: Internet Users in Brazil, 2000–2004 (in millions)

Comparative Estimates: Internet Users in Brazil, 2000–2004 (in millions)

Comparative Estimates: Internet Users in Brazil, 2000–2003 (in millions)

Comparative Estimates: Internet Users in Brazil, 2000 (by gender)

Media Metrix: Internet Users in Brazil, 2000 (by age)

Media Metrix: Internet Users in Brazil, 2000 (by number of years online)

Comparative Estimates: Internet Users in Brazil by Socioeconomic Strata,2000

Media Metrix: Employment Status of Internet Users in Brazil, 2000

C. eCommerce

eCommerce Revenues in Brazil, 2000–2004 (in billions and as a % of totalLatin American e-commerce)

Forrester: eCommerce Revenues in Brazil, 2000–2004 (in billions)

Morgan Stanley: eCommerce Revenues in Brazil, 2000–2004 (in billions)

IDC/BSCH: eCommerce Revenues in Brazil, 2000–2004 (in billions)

B2C eCommerce Revenues in Brazil, 2000–2004 (in billions)

Jupiter: B2C eCommerce Revenues in Brazil, 2000–2004 (in billions)

Morgan Stanley: B2C eCommerce Revenues in Brazil, 2000–2003 (inbillions)

Forrester: B2C eCommerce Revenues in Brazil, 2000–2004 (in billions)

BIS: Number of eMoney Products in Brazil, 1999

American Express: Anticipated Online Purchases in Brazil, 2000

B2B eCommerce Revenues in Brazil, 2000–2004 (in billions)

Computer Economics: B2B eCommerce Revenues in Brazil, 2000–2003 (inbillions)

Forrester: B2B eCommerce Revenues in Brazil, 2000–2004 (in billions)

Morgan Stanley: B2B eCommerce Revenues in Brazil, 2000–2003 (inbillions)

Symnetics: Distribution of Industrial B2B Portals by Industry

D. eAdvertising

Morgan Stanley: Online Advertising Expenditure in Brazil, 2000–2003 (inmillions)

Forrester: Online Advertising Expenditure in Brazil, 2000–2004 (in millions)

E. eMobile

Yankee Group: Technology Market Share by Operating Area, 2000

Wireless Subscriptions, Users and Penetration

Yankee Group: Average Revenue per Wireless User and Average MOU perMonth, 1997–2001

Index of Charts


176


America’s Network: Wireless Subscribers in Brazil, 2000–2005 (in millions)

Comparative Estimates: Wireless Subscribers in Brazil, 2000–2004 (inmillions)

ANATEL: Wireless Subscribers and Fixed-Line Telephones in Brazil,2000–2005 (in millions and as % of population)

ANATEL: Paging Subscribers in Brazil, 2000–2005 (in millions)


QuickStats: Mexico, 2000

A. Overview


Internet Users in Mexico, 2000–2004 (in millions and as a % of population14+)

Morgan Stanley: Internet Users in Mexico, 2000–2004 and 2010 (inmillions)

Jupiter: Internet Users in Mexico, 2000, 2002 & 2004 (in millions)

IDC: Internet Users in Mexico, 2000 & 2002 (in millions)

Pyramid: Internet Users in Mexico, 2000, 2002 & 2004 (in millions)

Comparative Estimates: Internet Users in Mexico, 2000, 2002 & 2004 (inmillions)

NetValue: Internet Users in Mexico, 2000 (by gender)

NetValue: Internet Users in Mexico, 2000 (by age)

NetValue: Internet Use in Mexico, 2000 (by number of years online)

NetValue: Internet Users in Mexico by Socioeconomic Strata, 2000

NetValue: Mexican Internet Users Engaging in Various Online Activities,2000

C. eCommerce

eCommerce Revenues in Mexico, 2000–2004 (in billions and as a % oftotal Latin American e-commerce)

Forrester: eCommerce Revenues in Mexico, 2000–2004 (in billions)

Morgan Stanley: eCommerce Revenues in Mexico, 2000–2003 (in billions)

B2C eCommerce Revenues in Mexico, 2000–2004 (in billions)

Forrester: B2C eCommerce Revenues in Mexico, 2000–2004 (in billions)

Morgan Stanley: B2C eCommerce Revenues in Mexico, 2000–2003 (inbillions)

Jupiter: B2C eCommerce Revenues in Mexico, 2000–2004 (in billions)

BIS: Number of eMoney Products in Mexico, 1999

AMIPCI/Greenfield: % of Consumers Buying Products Online in Mexico, byProduct Category

MUND: B2C eCommerce in Mexico, 2000

MUND: Mexican Confidence in the Security of Buying Online

B2B eCommerce Revenues in Mexico, 2000–2004 (in billions)

Computer Economics: B2B eCommerce Revenues in Mexico, 2000–2003(in billions)

Forrester: B2B eCommerce Revenues in Mexico, 2000–2004 (in billions)

Morgan Stanley: B2B eCommerce Revenues in Mexico, 2000–2003 (inbillions)

Index of Charts


177


D. eAdvertising

Forrester: Online Advertising Expenditure in Mexico, 2000–2004 (inmillions)

Morgan Stanley: Online Advertising Expenditure in Mexico, 2000–2003 (inmillions)

E. eMobile

COFETEL: Wireless Subscribers, Fixed-Line Telephones and PagingSubscribers in Mexico, 2000 (in millions)

Yankee Group: Millions of Wireless Subscribers and Subscribers per 100Inhabitants, 2000–2004

Comparative Estimates: Wireless Subscribers in Mexico, 2000 (in millions)

COFETEL: Wireless Subscribers and Fixed-Line Telephones per 100Inhabitants in Mexico, 2000


A. Chile

QuickStats: Chile 2000

Santiago Chamber of Commerce: Top Consumer Categories in Chile, 2000

World Bank: Income Distribution in Chile, 2000

Concentration in the Capital City

Subtel: Wireless Subscribers and Fixed-Line Telephones in Chile, 2000 (inmillions)

Comparative Estimates: Wireless Subscribers in Chile, 2000 (in millions)

Subtel: Wireless Subscribers and Fixed-Line Telephones per 100Inhabitants in Chile, 2000

B. Colombia

QuickStats: Colombia 2000

C. Venezuela

QuickStats: Venezuela 2000

Index of Charts

Index of Charts


178


Also Available from eMarketer

eDemographics Report■ User demographics worldwide■ Age, gender, and race■ Income, education, and occupation■ Usage patterns

eAdvertising Report■ eAdvertising revenues worldwide■ Spending by ad format (banner ads, sponsorships, e-mail, etc.)■ Spending by industry category■ Measurements and standards (click-through rates, CPMs, ROI)

eMail Marketing Report■ eMail marketing revenues worldwide■ eMail users and user demographics■ Permission, opt-in, and opt-out■ eMail marketing techniques and strategies

eCommerce: B2C Report■ eCommerce: B2C revenues worldwide■ Top B2C categories■ Online shoppers, buying frequency, and size of transactions■ eConsumer attitudes and behaviors

eCommerce: B2B■ eCommerce: B2B revenues around the world, country by country■ eCommerce: B2B by industry■ Internet penetration among businesses■ Online marketplaces, auctions, and exchanges

eBanking Report■ Online banking around the world (US, Europe, Asia)■ Mobile banking■ Electronic bill presentment and payment

eInvesting Report■ Online brokerages■ Online mutual funds■ Online asset management■ Online investment advice

Privacy & Security Report■ Consumer attitudes and behavior toward online privacy■ Online fraud■ Credit card security■ Corporate security (hacking and denial-of-service attacks)■ Virus attacks

ASP Report■ Market size and growth■ Industry leaders■ Usage patterns■ Customer satisfaction


179


eMobile Report■ Mobile internet use around the world, country by country■ mCommerce■ mFinance■ mAdvertising

Broadband Report■ Users by access method (dial-up, fiber, DSL, cable, satellite, wireless)■ Residential and business usage■ User demographics■ Growth drivers (ITV, streaming media, online gaming)

Interactive Television Report■ User forecast■ Revenue forecast■ Business attitudes and behavior■ User attitudes and behavior

eGlobal Report■ Internet infrastructure, by region■ Users and usage, by region■ eDemographics, by region■ eCommerce, by region

eEurope Report■ Economy and infrastructure■ Internet users and demographics■ eCommerce, eFinance, and eAdvertising■ Country profiles

eAsia Report■ Economy and infrastructure■ Internet users and demographics■ eCommerce, eFinance, and eAdvertising■ Country profiles

eLatin America Report■ Economy and infrastructure■ Internet users and demographics■ eCommerce, eFinance, and eAdvertising■ Country profiles

For more information, or to order a copy, contact eMarketer at:

Phone: 212.677.6300 Fax: 212.777.1172

eMail: [email protected] Web: www.emarketer.com

For media inquiries:Gary Galati, Communications director, [email protected]

For inquiries about this report or other eMarketer reports:Marius Meland, editor, [email protected]

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