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Growth – The new challenge Alberto Leite Executive Director and Publisher


The new rules


The new rules


The new rules

Nominal Estados Unidos

Purchasing Power Parity 13811

Estados Unidos

13811

Japão

4377

China

7055

Alemanha

3297

Japão

4284

China

3280

Índia

3092

Reino Unido

2727

Alemanha

2727

França

2562

Rússia

2088

Italia

2107

França

2061

Espanha

1429

Reino Unido

2046

Canadá

1326

Brasil

1834

Brasil

1314

Italia

1777

Rússia

1291

Espanha

1405

Índia

1170

México

1345

Coréia do Sul

970

Coréia do Sul

1199

México

893

Canadá

1178

Austrália

821

Turquia

922


The new rules

2050 China Estados Unidos Índia Brasil México Rússia


Next generation rules


Next generation rules

Great Generation – Pre 1928 Silent Generation – 1928 to 1946 Boomer Generation – 1946 to 1964 (high touch – high touch) X – 1964 to 1980 (high touch – high tech) Y – 1980 to 1998 (high tech – high tech) Z – 1998 to present (high tech – high touch)


Trends – Horizon Report Trends – ICT Cases 8


Technology – Horizon Report

http://wp.nmc.org/horizon2010/


Mobiles – 1 year or less (nearly 4 billion subscribers)


Mobiles – 1 year os less


Open Content – 1 year or less (collective knowledge)


Electronic Books – 2 to 3 years


Electronic Books – 2 to 3 years


Simple Augmented reality – 2 to 3 years


Gesture Based Computing – 4 to 5 years


Visual Data Analysis – 4 to 5 years


EIU – Trends and Innovation

• Prepared by the Economist Intelligence Unit The Economist Intelligence Unit is the world leader in global business intelligence. It is the business-to-business arm of The Economist Group, which publishes The Economist newspaper. The EIU’s editorial principles: transparency and independence 18


EIU – Methodology

• The EIU produces numerical forecasts for 150 countries • Forecasts are produced on spreadsheet-based models, developed by our in-house economics team • All equations within the model have the same basic form across countries, but each country model is customised to suit features specific to the individual economy • Each country model is closely linked with the forecast for the rest of the world and each forecast is based on our global assumptions 19

• Exports for each country are related to our import demand forecasts for that country's top 20 markets • export and import competitiveness is assessed with reference to competitor countries' trade prices • the value of foreign-currency debt is revalued every year with reference to international exchange-rate movements • debt interest payments are pegged to movements in developed-country interest rates • global capital inflows and outflows are reconciled


Global economy: the recession of2009 ‌

‌ and beyond?

Emerging markets

9 8

Developed countries

7

World

6 5 4 3 2 1

Slowest growth since 1982

2008

2006

20

2004

GDP growth, % change, year on year; market exchange rates. Source: Economist Intelligence Unit, Q4 2008

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

0 -1


ro pe Eu

er ica Am

Real GDP, % change, year on year. Source: Economist Intelligence Unit, Q4 2008

21

UK

US

Ja pa n

Eu

ro

zo ne

La tin

AS EA N

n st er Ea

CI S

ric a Af

M idd

le

In

Ea st

dia

Ch ina

Where’s the growth in 2009?


USA: dragging the world down

• prices still falling; peak to trough will approach 30% • inventories of unsold homes still near record

• exports have been strong, but fading as rest of world sinks

House prices

15 10 5

• Rest of economy falling fast • labour market plunging • consumer spending declining • industrial output weakening

Retail sales

20

• Housing market depression

0 -5 -10 -15 -20 2008 - Jul

2007 - Oct

2007 - Jan

2006 - Apr

2005 - Jul

2004 - Oct

2004 - Jan

2003 - Apr

2002 - Jul

2001 - Oct

22

2001 - Jan

Existing house prices; % change, year on year; advance retail sales; % change year on year. Source: Bureau of Economic Analysis, Case-Shiller home prices, Q4 2008


LatAm: GDP growth rate plummets 7 Latin America World

6 5 4 3 2 1

23

2013

GDP growth, % change, year on year; market exchange rates. Source: Economist Intelligence Unit, Q4 2008

2012

2011

2010

2009

2008

2007

2006

2005

2004

0


LatAm growth: under pressure

GDP % growth at market exchange rates. Source: Economist Intelligence Unit, Q4 2008

24


Commodity prices: deflationary pressure 60 40 20

Price of barrel of oil (US$) 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

38.30

54.44

65.39

72.71

97.00

35.00

50.00

54.50

55.00

50.00

Percentage change in prices. Source: Economist Intelligence Unit, Q4 2008

25

2013

-80

2012

Oil Non-oil commodity prices Food and beverages Industrial raw materials

-40 -60

2011

2010

2009

2008

2007

2006

2005

-20

2004

0


Argentina, Brazil and Mexico economies 10 8

Argentina Brazil Mexico

6 4 2

GDP growth, % change, year on year; market exchange rates. Source: Economist Intelligence Unit, Q4 2008

26

2013

-2

2012

2011

2010

2009

2008

2007

2006

2005

2004

0


Global ICT spend: hardware fares the worst 16

Hardware IT services Packaged software Telecoms services

14 12 10 8 6 4 2

27

2013

Percentage change in growth rates. Source: IDC, Economist Intelligence Unit, Q4 2008

2012

-4

2011

2010

2009

2008

2007

2006

-2

2005

0


Global ICT adoption: main growth in mobile 100

Telephone main lines Mobile-phone subscriptions Broadband subscriptions PCs

90 80 70 60 50 40 30 20 10

2013

2012

28

2011

All categories measured per 100 people. Source: Economist Intelligence Unit, Q4 2008

2010

2009

2008

2007

2006

2005

2004

0


Tech crash: not as bad as in 2001

• Tech was cause last time, victim now • Period of readjustment after dotcom crash has already happened • Still-growing developing world counts for more of total ICT spending: developed countries’ spend now accounts for 76% of total, down from 85% in 2004, according to OECD • IT more critical now – hard to make cuts on ‘essential’ spend 29


But pressure for some, opportunities for others

• Hardware will bear the brunt • sales of desktop and laptop PCs, mobile phones and semiconductors will slump this year • Shift to ‘cloud’ will put pressure on software firms selling licensed products • providers of pay-per-usage and SaaS products could flourish • Recession could intensify pressure on operators from regulation and competition • demise of fixed-line telephony to quicken, while mobile-phone customers curb their usage • Sales of smartphones and low-cost netbooks may buck general trend, albeit from low base 30


LatAm ICT spend: slowing, but still growing 40

Hardware IT services Software Telecoms services

35 30 25 20 15 10 5

Percentage change in growth rates. Source: IDC, Economist Intelligence Unit, Q4 2008

31

2012

2011

2010

2009

2008

2007

0


LatAm ICT adoption: mobile success story 100 90 80 70

Telephone main lines Mobile-phone subscriptions PCs Broadband subscriptions

60 50 40 30 20 10

2013

32

2012

All categories measured per 100 people. Source: Economist Intelligence Unit, Q4 2008

2011

2010

2009

2008

2007

2006

2005

2004

0


LatAm: a mobile broadband future?

• IT spend growth will drop this year but continue to grow over forecast period at moderate, steady pace • Mobile phone take-up rates in LatAm among highest in the developing world, but competition and regulation will lower revenue growth rate • Mobile broadband next big thing? • poor fixed-line coverage • investments by major international players • falling price of smartphones and miniature laptops 33


Mexico: ICT spend

25

20

Hardware IT services Packaged software Telecoms services

• Government bolsters ICT spend • ICT grows but from small base: 1% of GDP vs. OECD ave. of 4% • Regulatory curb of top telco’s dominance will lead to falling telecoms prices

15

• Prosoft aims to position Mexico as software manufacturer. Gov’t targets software production by 2013 of US$5bn

10

5

• Copyright piracy in Mexico cost software industry about US$1.1bn in 2007

0

• Ties with US help outsourcers, but competition from low-cost, English-speaking rivals from India

2007 2008 2009 2010 2011 2012 Percentage change in growth rates. Source: IDC, Economist Intelligence Unit, Q4 2008

34


Mexico: ICT adoption 100

• Lower spend on PCs and mobiles will lead to slight slowdown in adoption, with recovery in 2010

90 80

• Low penetration suggests strong potential for growth in PC market when economy recovers

70 60 50

Telephone main lines Mobile-phone subscriptions Broadband subscriptions PCs

40 30 20 10 0 2005

2007

2009

2011

2013

All categories measured per 100 people. Source: Economist Intelligence Unit, Q4 2008

35

• Significant potential in broadband sector: four broadband lines per 100 people • Ecommerce in infancy, but usage rising quickly: growing trust in use of online credit cards and rising broadband take-up


Mexico: ICT penetration and spending totals

ICT penetration (’000) 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Telephone main lines

17,840 19,228 19,332 19,038 19,048 18,907 18,445 18,115 17,830 17,507

Mobile-phone subscriptions

38,190 46,629 55,150 66,000 72,000 76,000 82,000 88,000 94,000 94,000

Broadband subscriptions

909

PCs

1,514

2,576

4,313

6,391

8,151

9,767 11,250 12,727 14,181

11,210 12,642 14,362 16,858 19,022 20,241 23,056 26,749 31,043

-

ICT spend (US$m) Hardware

2006 5,813.51

2007 6,950.53

2008 8,210.42

2009 8,456.32

2010 9,094.60

2011 9,743.03

2012 10,215.28

IT services

2,698.20

2,950.90

3,361.27

3,645.35

3,989.58

4,382.12

4,846.15

Packaged software

1,336.52

1,446.35

1,631.50

1,783.76

1,987.29

2,231.19

2,512.15

Telecoms services

22,221.26

25,536.18

28,251.95

29,747.04

30,482.22

30,837.09

30,963.01

Source: IDC, Economist Intelligence Unit, Q4 2008

36


Mexico: communications market make-up Mobile-phone market

• Incumbent overwhelmingly dominant in fixed-line and mobile-phone markets. Expected to lose market shares through 2013

Iusacell 6% Nextel 3% Telefónica 17% Telcel 74%

Broadband market

Maxcom 2%

Fib erT el 32 %

Telmex 73.5%

Fixed-line market % el 4 Axt

Alestra 2%

Others 11%

• Mobile number portability helps competitors pick up customers

Telmex 92%

Megacable 7.5% Source: Budde, Pyramid Research, Economist Intelligence Unit, Q4 2008

37

• Mobile-phone operators to promote 3G heavily this year • Regulation prevents incumbent from offering TV: cable firms can attack it in the broadband market using triple play • Mobile-phone competitors may acquire a fixed-line player to challenge the incumbent • Incumbent must convince regulator it is ‘playing fair’ to preserve its position


Argentina: ICT spend 60 50

Hardware IT services Packaged software Telecoms services

• Business sector cost cuts will hit demand for new hardware in 2009, but recovery in 2010

40

• Software subsector to perform better: important for most business sectors, buoyed by emergence of more SMEs since 2002

30 20

• Saturation and falling prices: telecoms revenue growth slowing through 2013; larger share for new-wave data services

10 0

2007 2008 2009 2010 2011 2012

Percentage change in growth rates. Source: IDC, Economist Intelligence Unit, Q4 2008

38

• ICT sector: 4.8% of GDP in 2007, fuelled by rapid economic growth


Argentina: ICT adoption

120

• Consumers less likely to add second mobile line due to recessionary economy and saturation

100 80 Telephone main lines Mobile-phone subscriptions Broadband subscriptions PCs

60 40 20 0

2005

2007

2009

2011

2013

All categories measured per 100 people. Source: Economist Intelligence Unit, Q4 2008

39

• Broadband benefits from strong interest in Internet (including potential to help businesses reduce costs) • Pace of increase in PC ownership will slow • Ecommerce has good potential, partly due to growth in broadband: about 11m Argentines have used the Internet for purchases; Internet transactions grew 100% in 2007 to pass Ps20bn (US$6.5bn)


Argentina: ICT penetration and spending totals

ICT penetration (’000) Telephone main lines Mobile-phone subscriptions

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

8,761

9,442

9,460

9,640

9,750

9,850

9,950 10,050 10,175 10,175

13,535 22,156 31,512 40,402 41,733 42,141 42,545 42,946 43,346 43,743

Broadband subscriptions PCs

523

898

1,690

2,568

3,196

3,450

3,900

4,300

4,800

5,200

4,350

5,200

6,435

8,222

9,893 10,636 11,467 12,556 13,128 13,665

ICT spend (US$m) 2006 1,494.21

2007 2,339.46

2008 2,913.18

2009 3,101.97

2010 3,451.29

2011 3,742.13

2012 4,014.59

IT services

642.68

726.06

824.39

898.46

988.53

1,097.39

1,225.57

Packaged software

353.32

355.44

402.71

445.12

495.99

552.82

614.02

Telecoms services

7,409.70

7,857.69

,8587.53

9,131.23

9,568.09

9,969.48

10,282.15

Hardware

Source: IDC, Economist Intelligence Unit, Q4 2008 40


Argentina: communications market make-up Mobile-phone market

Telecom Argentina 27.7%

• América Móvil helped by its low-cost mobile-phone offers Telefónica 35.3%

• But promotions from Telefónica may help keep it on top • Telecom Argentina’s focus: protecting ARPU

América Móvil 35%

Broadband market

Fixed-line market Others 1.6%

FiberTel 32.2%

Telefónica 34.1%

Telecom Argentina 47%

Telefónica 53%

Telecom Argentina 32.1%

Source: Budde, Pyramid Research, Economist Intelligence Unit, Q4 2008

41

• 3G rollouts may stall in 2009, but long-term prospects good: competition among operators; consumer enthusiasm; pending auction of more 3G spectrum • DSL still dominates broadband market, but cable a major threat: telcos cannot offer TV and, therefore, triple play • Telefónica and Telecom making offers more attractive; chance that regulation may change


Brazil: ICT spend 50 45 40

Hardware IT services Packaged software Telecoms services

35

• However, in 2009, companies will curb investments in new hardware; growth rate will remain just below 10% • Cost of communications falling due to regulation and price competition: little growth in revenues by end 2013

30 25

• Data and 3G gain greater proportion of total revenues

20 15

• Merger of Oi and Brasil Telecom intended to create national champion will intensify competition, but bulk of revenues will remain in foreign hands

10 5 0

• ICT industries will continue to benefit from government initiatives to lift gross fixed investment

2007 2008 2009 2010 2011 2012

Percentage change in growth rates. Source: IDC, Economist Intelligence Unit, Q4 2008

42


Brazil: ICT adoption 120

• Mobile-phone take-up slows through 2013: result of economic downturn and services being extended to poorest communities

100 80

• Falling PC prices are boosting PC ownership

60 Telephone main lines Mobile-phone subscriptions Broadband subscriptions PCs

40 20 0 2005

2007

2009

2011

2013

All categories measured per 100 people. Source: Economist Intelligence Unit, Q4 2008

43

• Broadband penetration growing more slowly than elsewhere in Latin America: offers still expensive, poverty relatively widespread and income inequalities acute • With company focus on 3G, and handset and netbook prices falling, mobile broadband could become a major driver of growth


Brazil: ICT penetration and spending totals

ICT penetration (’000) Telephone main lines

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 36,212 35,571 35,419 34,700 33,890 33,127 32,382 31,654 30,943 30,247

Mobile-phone subscriptions

66,087 86,844 100,803 122,262 148,679 167,184 184,541 193,536 202,950 212,000

Broadband subscriptions

2,589

PCs

4,106

5,736

7,727 10,708 12,925 14,423 15,981 17,479 18,654

24,440 30,708 37,670 43,857 50,034 55,510 60,392 65,168 69,567 72,498

ICT spend (US$m) Hardware

2006 8,935.22

2007 13,168.13

2008 17,814.62

2009 19,412.59

2010 22,242.49

2011 24,867.03

2012 26,896.97

IT services

6,862.15

8,559.00

10,920.54

11,855.78

12,955.16

14,173.58

15,449.22

Packaged software

2,741.37

2,984.22

3,439.31

3,808.20

4,249.87

4,781.55

5,425.37

Telecoms services

54,233.12

58,999.77

75,463.57

78,337.53

79,032.20

79,255.44

79,385.35

Source: IDC, Economist Intelligence Unit, Q4 2008

44


Brazil: communications market make-up Mobile-phone market Brasil Telecom 3.7% Others 1.5%

Oi 15.4%

Telecom Italia 24.7%

Broadband market

• Mobile-phone market evenly split between four groups

Vivo (Telefónica and Portugal Telecom) 29.7%

• 3G next growth opportunity: 1.45m customers since launch in late 2007 • Economic crisis may force capex cuts and delay goal of covering 80% of pop. by 2011

América Móvil 25%

Fixed-line market

GVT 4.2% Other 10.8%

Net Group 21.5%

Oi 19.4% Brasil Telecom 18.4%

Telefónica 25.7%

Others 16%

Oi 34.4%

Telefónica 29.3% Brasil Telecom 20.3%

Source: Budde, Pyramid Research, Economist Intelligence Unit, Q4 2008

45

• Number portability expected to benefit Oi at expense of Vivo • Little overlap among DSL broadband operators, and, with limited wholesale competition, prices are high and takeup is low • Merged Oi and Brasil Telecom, which plans to expand nationwide, may shake up DSL market


Summing up

• While growth will slow, IT spending will still increase this year, creating opportunities for new entrants and incumbents alike • For some CIOs, now may be the time to consider fundamental shifts in approach – taking advantage of developments like virtualisation and SaaS • For others, financial discipline may be the key – remember that an economic recovery in 2010 is still the expectation • Communications markets remain dynamic, buoyed by investments from financially sound companies • For many Latin Americans, mobile broadband is most likely to be the next big thing


Ways


Verticals

Health government

Energy

Education

ICT

Transportation

$

Agrobusiness Retail


Verticals

Sector: Healthcare Revenue: U$ 40 m Owner: Paulo Magnus


Verticals – some ideas

Media – Woodwing, management, sites, development, storage; HealthCare – PACs, storage, netoworking, hardware; Education – Images, storage, systems;


Management

Sector: Telecom Revenue: U$ 25 m Owner: Renato Carneiro


Management


Management


Management - questions

Pipeline Forecast Cash Flow M&A Governance Services


Technology

Technology: Mobile Revenue: U$ 10 m Owner: Fabio Takahashi


SMB


Standard project at a large company

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Ger. Med. TI

CEO

Fabricante

CIO

Ger Med. Àreas

Prog/Anal/Espec

Consultorias

Trein

Canal

Suporte


Standard project at a SMB company

32 28 24 20 16 12 8 4 0 Def

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CEO

Gerente de TI/CIO

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Iplem.

Trein

Suporte


Geography


Geography


Geography

Geography: Belem, Brazil Revenue: U$ 55 m Owner: Roberto Ferreira


Segment

Ages

Sexual orientation Ethnical groups – over 24.000


P2P


Experiences

U$ 2

U$ 4.000,00

U$ 25,00

U$ 100,00


Thanks Alberto Leite aleite@itmidia.com.br


Xchange 2010 presentation