while thousands of tech-heads have converged on Las Vegas for the Comdex
tradeshow, more than 100 international Internet leaders are huddled in Miami,
strategizing over the hottest growth market on the Web -- Latin America.
With increasing attention being paid to skyrocketing Internet use in Europe
and Asia-Pacific, Latin America has, so far, played primarily only a sideline
But that's about to change, according to industry leaders and leading
Research firm International Data Corp.
estimates Latin American Web commerce will surpass $8 billion by the end of
America shows the fastest growth anywhere in Internet usage -- from 4.8 million
users in 1998 to an estimated 19.1 million by 2003, a fourfold increase.
"Latin America is definitely one of the faster growing regions, but it has
some natural roadblocks in place that need to be resolved before it can really
blossom," explained Annika Alford, program manager for IDC Latin America.
promise to be hot topics at this week's invitation-only "eCumbre" conference (in
Spanish, cumbre means "come together at the top, exchange ideas, gather"), which
runs through Tuesday at a resort just outside Miami.
Business leaders and researchers point to the
relatively high cost of computers and Internet access as a major problem to
expanding the Web audience beyond its current, mostly upper-middle-class base.
"The typical user in Latin America is spending more than any other region,
which isn't a good thing because they're at the lower end of the gross domestic
product, per capita wealth scale," said Alford.
There is some encouraging news. The average cost of a desktop PC in Latin
America was $1,340 in the final quarter of 1998, down from $1,500 at the
beginning of the year.
PC shipments up slightly
recently, IDC predicted the shipment of PC's to the region would increase 1.5
percent in the first quarter of 1999 -- despite earlier predictions that
shipments would fall because of the weakened Brazilian real.
Many experts believe that problems with telecommunications companies that
charge by the minute for Internet access are unlikely to remain an issue for
They predict Latin America will follow in the footsteps of Europe and Asia
and leapfrog many of the access issues that have plagued modem-bound users in
the United States.
"In Argentina, cable modems are becoming increasingly popular," explained
Clive Cook, former chief operating officer for the Latin American financial
portal Patagon.com, and now a partner in South Beach Venture Partners, a venture
capital firm specializing in Latin American Internet companies.
"In Mexico City, we're seeing wireless technology you don't even see in the
But not everyone thinks the elite status of Latin America's
users is a problem.
For many companies, the ability to communicate directly with a highly
educated, wealthy audience in a market with comparably little competition is a
dream come true.
"In Latin America, about 10 percent of the population controls all wealth and knowledge. We're
targeting that group. They're a premium group," explained Radames Soto,
executive director of Wall Street Journal
Interactivo, the online Latin American edition of the Wall Street Journal.
Unlike its English-language counterpart -- which is one of the most
successful subscription-based sites on the Web -- WSJ Interactivo does not
charge for its content. But Soto says that may change.
The site will roll out subscription-only areas over the next 1 1/2 years, he
said. "(We'll) see how the culture reacts to subscription -- if it doesn't work,
we'll continue to be free."
really lies in Latin America, where none of the big companies have established
themselves. Which means a small brand with lots of money actually has an
opportunity to become a major market shareholder," agreed Kyle McNamara, CEO of
Spanish e-commerce portal, Espanol.com.
With an estimated 392 million Spanish speakers in the
world, McNamara's hope for an open playing field isn't likely to remain a
possibility for long.
Already, such major brands as Yahoo! and America Online have established a strong presence in the region.
And when Spanish portal darling StarMedia debuted on the Nasdaq last May,
its initial public offering netted the company $105 million at an offering price
of $15 a share. Shares hit a high of $70 on June 30.
E-commerce barriers remain
everything about the Latin American Internet scene is quite so rosy.
Significant barriers still remain preventing the easy execution of e-commerce
transactions. The use of credit cards, a key ingredient in buying things online,
isn't nearly as widespread as in the United States.
Tariff barriers and customs regulations make shipping items in between
countries a logistical nightmare. And customers are still hesitant to put their
trust in making online purchases.
"Consumer confidence is a big issue there," said David Taggart, partner in
South Beach Venture Partners. "Consumers just don't have a hell of a lot of
rights there. Compound that with not being able to interface with them and
compound that with having to put your credit card online -- most companies are
trying to figure out how to clear that major hurdle."
"The companies that are going to be successful have to really invest in
logistics," reiterated McNamara of Espanol.com. "You're either looking at a
partnership or a warehousing strategy."
The multilingual Web
those strategies early on will be a major part of the discussions during the
eCumbre conference. With millions of Spanish-speaking Internet users at stake,
it's an area companies aren't willing to ignore.
"As 392 million Spanish speakers really come up to speed and get online,
they're really going to make an impact," said McNamara.
"I think you'll see over time as the Web becomes multilingual, you'll see
people demanding that it be in their own language," predicted Cook.