August 22, 2011 3:55 pm

NEC expects Latin America sales to reach $5bn

NEC expects to increase sales in Latin America tenfold to $5bn by 2017, boosted by demand from Brazil’s gadget-obsessed consumers and infrastructure needs as the country prepares to host the World Cup and the Olympics.

Latin American net revenue at the Japanese technology company is expected to double from $500m last year to $1bn by 2012 before reaching $5bn just after the 2016 Olympics, with about half of the region’s sales coming from Brazil, Herberto Yamamuro, chief executive officer of NEC’s Brazilian unit, told the Financial Times.

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NEC first arrived in Brazil in the 1970s at the request of the military to help expand the national telecommunications network, but has since diversified and now sees most of its growth there coming from mobile internet, cloud computing and machine-to-machine (M2M) technology.

“The distribution of income is very unequal in Brazil … but when you have a population of 200m, even 20 per cent [of that would mean] a lot of consumers,” said Mr Yamamuro. “And Brazilians are true consumers; they spend whatever they have. Even kids have credit cards.”

As part of its M2M business, NEC is planning to help introduce high-tech gadgets that already exist in places such as South Korea, and which the company believes will prove popular among Brazil’s new super rich. One example is refrigerators that track their content through bar codes, letting their owner know through a text message when products are out of date or even making direct orders from a nearby supermarket.

“Brazilians always want the latest thing,” said Mr Yamamuro.

He said consumers in Mexico, NEC’s second biggest market in Latin America, are much more conservative.

The company has also just concluded a trial in partnership with the Japanese and Brazilian governments in Rio de Janeiro, fitting taxis with tracking devices to help monitor the city’s traffic. The system is expected to be in place before Rio hosts the Olympics in 2016.

However, one of NEC’s main goals in Brazil is updating the country’s mobile phone network. With currently more handsets than people in Brazil, the network is under immense strain and is likely to face more congestion as the ever-richer middle classes swap pre-paid phones for data-hungry smartphones.

“There is already so much traffic on the network and it’s really not prepared. Apart from increasing capacity there are other technologies we can use to help ease congestion,” said Mr Yamamuro.

Brazil has been rushing to improve its telecommunications infrastructure ahead of the World Cup in 2014 and the Olympics two years later, but Dilma Rousseff, the president, has also frequently cited technology as a long-term tool to reduce poverty.

Under the recently introduced National Broadband Plan, the government has already committed up to R$1bn (US$627m) a year until 2014 to expand high-speed internet of one megabyte per second across the country.

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