Arrival of iPhone Boosts Competition in the Latin America Mobile Handsets Markets

The advent of the iPhone in the Latin American market has created quite a stir in the marketplace, greatly enhancing the levels of awareness of the value of smart phones. Although the iPhone's impact on the market was massive, competition was quick to react, unveiling a slew of models possessing features similar to the iPhone. The result was that the benefits of smart phones became increasingly evident, enabling deeper market penetration of the product.

Analysis from Frost & Sullivan finds that smart phones in Latin America are poised for strong growth over the long term, since they enable the advanced data services that corporate and young users are demanding.

"Mobile office applications, rich multimedia uses, and social networking are among the main drivers," says Frost & Sullivan Industry Manager Ignacio Perrone. "This can be observed simply by looking at any mobile operator's handsets offer; the range of available smart phones is really large, and is connected with the operator's strategy of focusing on data services that help to increase average revenue per user (ARPU)."

Latin America is currently at the same stage of growth as Europe was in 2004 and is expected to follow a similar evolutionary path. All countries in the region will display growth in the uptake of smart phones; however, the logic behind adoption will vary from country to country. In Argentina, Brazil, and Chile, evidence points to user preference for phones that provide better experience and more functions, whereas for users in Venezuela and Mexico, these handsets are looked upon as status symbols.

Though market prospects look encouraging, there are some impediments restraining progress. Issues such as high cost, billing issues for data services, and battery autonomy will have to be addressed to unlock the full potential of these advanced devices. The cost of a smart phone in Latin America is also a major challenge, but the impact of this factor will decrease in the long run as vendors benefit from larger economies of scale.

"Operators are working to solve these issues with subsidies and simpler billing schemes," explains Perrone. "Carriers need to continue expanding their 3G networks, promote useful applications, and address the main market barriers in order to be able to leverage smart phones and make them a true ARPU booster."

The iPhone is available in a dozen countries across the region due to sustained efforts of the main regional carriers and some minor participants. In order to capitalize on the opportunities unleashed by smart phones, it is imperative to understand the factors driving their growth as well as the interaction of these types of handsets with other categories such as feature phones and ad hoc phones.

Posted to the site on 27th May 2009