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Brazil internet market

Page history last edited by Brian D Butler 11 years, 9 months ago

 

 

 

 

 

Market Size (Brazilian internet market)

 

"Forrester forecasts that the eCommerce industry in Brazil will grow at 18 percent year-over-year, with total sales expected to reach $22 billion by 2016."  Read more from TechCrunch

 

Start-up troubles in Brazil:

 

"...growing a business in Brazil even with celebrity endorsement isn’t easy. For years, the country dealt with crippling hyperinflation, which in turn destroyed a generation of entrepreneurs in Brazil, Smith says, and leaving not only entrepreneurs but workers and consumers extremely risk averse. As a result, it makes it challenging to compete for talent, and hire away from the big, established multinational companies in Brazil. Not to mention the fact that equity is, generally speaking a novel concept in Brazil, nor does being backed by names like “SV Angel” or Tiger Global — which would likely be recognized in the U.S.

 

"The cost of skilled labor is high, and so are salaries. In the U.S., the payroll tax is about 15 percent, whereas in Brazil it’s closer to 70. Companies generally have to pay at least one meal a day for their employees, they have to pay for transportation, etc. So, while the worker protections built into national policy can make it a dream for the skilled laborer, it’s not exactly easy on the pockets of a startup, when they’re having to pay 100 to 120 percent on top of salary. “Plus, it’s nearly impossible to fire someone, and you can get sued for just about anything here,” Smith says.

 

Read more fromTechCrunch

 

 

Cultural Barriers:

 

"Also, Brazil is not a ‘fail fast & iterate’ culture. Failing is both frowned upon, and painful bureaucratically – for instance, closing a company in Brazil can be a Kafka-esque experience for those who try."  Read more from TechCrunch

 

 

Taxation & Bureaucracy:

 

 

"Whether you are an investor, and especially if you are an entrepreneur, this is no doubt a major downside and one of the more challenging aspects of doing business in Brazil.  The Brazilian tax system is heavy, hugely cumbersome, and at times very unclear, resulting in unknown liabilities.  Labor costs are very high both on hiring and firing, and the legislation is inflexible and hardly supportive of entrepreneurship.  Take for example a recent decision by a major multinational company to block email distribution to its workforce in non-working hours and on vacations, after having lost a an ‘overtime’ labor suit for this reason.  Imagine the potential liabilities, and restrictions to productivity, of such a legal decision(!)  Brazil is laden with these ‘mines’ and unfortunately considerable time has to be spent dealing with bureaucracy rather than building great businesses."  Read more from TechCrunch

 

 

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Using Brazil as hub to serve latin American Market:

 

Why Brazil? Google Makes Brazil Center of Latin American Operations

 

According to the Brazilian news magazine Exame, Google has made Brazil the center of its Latin American operations, placing former country director Alexandre Hohagen at the helm.

 

Google is understood to have chosen Brazil for its superior regional performance. While the Mountain View, California-based search giant doesn’t comment on regional numbers, the article claims that Brazil is Google’s fastest growing market (hard to verify, but it’s certainly one of the fastest growing), generating an estimated $500 million per year in revenues. This is all the more impressive considering the Brazilian office was opened just three years ago and has only 200 employees.

 

The decision to run Latin American operations from Brazil comes soon after another decision to move all development and management of Orkut to that country, with most of the engineering in the city of Belo Horizonte. Orkut is Google’s social network, which enjoys most of its popularity in Brazil and India.

 

Brazil is also said to have the second largest number of Gmail accounts, perhaps because of the popularity of Orkut. Google’s biggest white labeled Gmail customer may also be in Brazil: iG, a portal with over 9 million accounts.

 

 

 

 

 

Social Networking in Brazil:

 

see blog post: Social networks: a big deal in Brazil

news from Comscore:  Eighty Five Percent of Brazilian Internet Users Visited a Social Networking Site in September 2008:  http://www.comscore.com/press/release.asp?press=2592

 

 

 

 

Selected Social Networking Sites

Total Unique Visitors (000)

Average Minutes per Visitor

Average Visits per Visitor

Total Internet : Total Audience

26,221

1,608.1

47.5

Orkut

20,752

496.1

28.3

Yahoo! Geocities

3,916

2.8

1.8

SONICO.COM

2,978

10.1

2.7

MINGLEBOX.COM

1,677

1.6

2.4

FOTOLOG.COM

1,606

22.1

5.3

8P.COM.BR

1,463

11.2

1.9

MULTIPLY.COM

1,189

4.4

1.5

HI5.COM

1,142

10.6

2.0

Lycos Tripod

1,115

1.8

1.4

MYSPACE.COM

893

13.2

2.3

LIMEALL.COM

387

0.6

1.7

DEVIANTART.COM

386

7.3

1.8

FACEBOOK.COM

360

14.2

2.7

 

 

 

For internet jobs in Brazil:

  • Java goes for about R$ 60 an hour. C/C++ R$ 90 and up.
  • html, php and stuff like that goes for peanuts (R$ 20/35).

 

 

Mobile Internet in Brazil:

 

Top 10 mobile internet sites in Brazil (# of unique users)

  • Google is the number-one destination for mobile Web users in Brazil and the rest of Latin America.
  • Orkut, Google's social-networking site, comes in second, followed by the Brazilian sites globo.com and Terra.
  1. google.com
  2. orkut.com
  3. globo.com
  4. terra.com.br
  5. gamejump.com
  6. live.com
  7. youtube.com
  8. uol.com.br
  9. my.opera.com
  10. hotmail.com

 

 

 

 

 

 

Demographic shifts influence the internet market

 

see our discussion on Brazil demographics and Brazil: Economy

 

Hot Sectors - industries that should benefit from demographic trends:

 

  • Computers:  $15.1 billion dollars sold in 2007.  Expect 23% growth till 2012.
  • e-commerce: $6.4 billion reais spent online in 2007.   Expect 145% till 2010.
  • Internet Broadband connections:  just 8 million connections in 2007.  Expect 30 million by 2012 (275% growth)
  • Portable music players:  $99 million dollars spent in 2007.  Expect 105% growth till 2012.
  • Cell phones:  $3.2 billion dollars spent in 2007.  Expect 69% growth till 2012.

 

Source:  Exame, 04/2008

 

 

Innovative Internet companies in Brazil

 

Gift-giving simplified through a prepaid plan

Spontaneous gifts are generally well-received. But it's hard to find the time to shop & ship, let alone to remember to send an attentive something "just because." A Brazilian startup offers a simple solution.

 

 

 

 

 

 

 

 

Brasscom:  promoting Brazilian IT for exports:

 

 

Check this video out: http://www.youtube.com/watch?v=6YY3-vM6R4I

It positions Brazil as a top IT destination and is definitely a very good source of info.

You can also find some relevant data at www.brasscom.org.br

 

 

Invest in software to avoid paying taxes:

 

In Brazil, there is a law to encourage the software industry, where a company can avoid paying ICMS taxes if they invest in software development in Brazil.   This could be marketed to multinationals operating in Brazil as a way to lower their tax burdon if they shift software development to Brazil.  Clever.  This is a form of trade barrier that encourages local infant industry development (strategic industry).  Similar as what Brazil did with airplane industtry and film (see law Rouanet)

 

 

 

 

Old data: Internet market Brazil - 2008:

 

report from Comscore:  

 


Brazil internet comscore report - Get more Information Technology 

 

Brazil which has the largest and fastest- growing online population in Latin America.  www.comscore.com/press/presentations

 

Some of the key discussion points included:

*         Brazilians' strong preference for local content, giving local

providers an opportunity to take share from Google and MSN

*         As broadband penetration grows, so does the opportunity for

richer online experiences such as video streaming and music downloads

*         Brazilian consumers are becoming more comfortable with

purchasing online

 

Other Highlights:

  • Brazil is the global leader in Java programmers – BRASSCOM 
  • Year over year Online population growth in Brazil = 27% as of June 2008 which outpaces the worldwide average – comScore 
  • 33% of unique visitors to Brazilian web sites come from outside of Brazil – comScore 
  • Brazilians are far more likely to use Social Networks and Blogs than the average global Internet user – comScore 
  • Brazilians love of shopping reflected in above average visiting retail sites particularly consumer electronics – comScore 
  • Brazilians use lots of comparison shopping versus rest of world (twice more than average for the rest of world) – comScore 
  • Orkut (owned by Google) is the primary social network in Brazil – both reach and usage metrics outstrip all others .  8 out of 10 online users in Brazil visit Orkut – comScore
  • Brazil has the largest and fastest growing online population in an important emerging region – comScore

 

 

 

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