Understanding Tech Penetration In Latin America

Understanding Tech Penetration In Latin America

It’s pretty telling that Mark Zuckerberg didn’t choose Beijing, London or Dubai to have the first Facebook overseas town-hall meeting. He chose a place that 10 years ago few people in Silicon Valley knew much about, and much less regarded as a player in technology: Latin America.

A lot has changed in this part of the world over the past 20 years. Today, with over six countries worthy of investment-grade debt rating by Fitch and S&P (Brazil, Chile, Colombia, Mexico, Panamá and Perú among others) and a pervasive and ubiquitous penetration of both social and mobile technologies, Latin America is a radically different story, and technology companies that have understood this and learned to play in this turf have reaped generous benefits.

Foreign companies, like Facebook, Moovit and WhatsApp are clear examples of this and have profited from it. With well over 200 Million users, Latin America represents close to 20% of Facebook’s user base.

As reported earlier, Latin America is a key strategic market for Moovit representing north of 30 percent of its base. And when WhatsApp crossed 465 million users, Brazil and Mexico accounted for 70 million users or a whopping 38 percent of its user base.

With only 10 percent of the worldwide Internet audience, and less than 9 percent of the gross world product, Latin America could appear to many as insignificant. Yet, shining a spotlight on Brazil, just to highlight one country, gets you a radically different picture. Brazil’s population of 200 million, and over 240 million SIM connections leads it to outperform the world in terms of mobile penetration and carries the highest SIM-to-subscriber ratio (currently at 2.1 to 1).

There are at least six things entrepreneurs will have to accept to be successful in the Latin American market — a fascinating yet notoriously tricky region of the world.

Address the wireless carriers early

To say that the wireless industry is a cornerstone of Latin America is an understatement. While in developed countries like the U.S. and Europe, the mobile industry represents roughly around 2 percent of the economy, in Latin America it ranges from 4 percent to 5 percent and, furthermore, it is a very different animal.