New iPhone to Energize Latin American Smartphone Market

July 16, 2009

América Móvil announced the July 31 launch of the iPhone 3GS in six countries: Mexico, Colombia, Guatemala, El Salvador, Guatemala and Dominican Republic. Later in the year, the regional player will launch the new version in the rest of its subsidiaries. Pyramid Research expects other Latin America carriers, such as Telefónica-Movistar and TIM Brazil, to follow by launching the new version and promoting the 3G (8GB) version at a lower price point than in the first half of the year. The launch of the iPhone 3GS — but more importantly for Latin America, the lower price for the 8GB version — will energize the region’s smartphone market. As detailed in our recent Insider Smartphones in Latin America, Pyramid Research expects the smartphone category to grow from representing only 3% in 2008 to 30% in 2014.

We expect Apple to increase its market share of the smartphone segment in Latin America from 9% in 2008 to 15% in 2009, surpassing 1m iPhone units sold in 2009. Apple is one of the fastest-growing players in the region’s smartphone market due to its strong marketing strategy (including the power of the Apple brand), iPhone service bundles and marketing agreements with operators. Also, the iPhone is an iconic phone with highly differentiated features, such as 3G, a large touchscreen, advanced web browsing, a user-friendly interface and access to a plethora of applications.

While the new 3GS version brings important improvements, such as faster speed, video capabilities, up to 32 gigabytes of storage, voice control and Internet tethering, we expect the reduced price of the old 3G version (8GB) to have a higher impact on unit sales in 2009, representing more than 60% of total iPhone sales in 2009. iPhone bundles have been essential for growth; mobile subscribers could buy the 8GB for as low as US$100 in 2008, while today operators such as Telcel in Mexico offer it for free with data plans starting at $59 per month. According to our Latin America Handset Forecast, Brazil, Mexico, Venezuela, Argentina, Chile and Peru represent the biggest opportunities in the region, with 90% of total smartphones sales in the region in 2009.

The main factors contributing to the expansion of the smartphone market are the enhanced interest of mobile operators in boosting data revenue via smartphone usage, the intensifying competition in this segment among vendors that are introducing new models and decreasing the prices on legacy models (such as the case with Apple) and the current low adoption of smartphones. At only 3% of total handsets sales in 2008, the smartphone market shows great potential, particularly when compared with the global average of 12%.

— Omar Salvador, Senior Analyst

Related content:

Smartphones in Latin America: Big Opportunities for Operators and Suppliers
Telecom Insider published June 2009
Given the interest by operators in smartphones, intensified vendor competition and the potential for growth in Latin America, Pyramid Research estimates the region’s smartphone market to amounts to 150m handset units over the next five years. Smartphones will grow from 3% of total handset unit sales in 2008 to 30% in 2014. This report examines the potential for growth in Latin America’s smartphone market and the factors driving this trend by analyzing operators’ and vendors’ strategies. It provides Pyramid Research’s five-year forecast on smartphone adoption in the region. Looking at vendor positioning, it focuses on three cases: Nokia, Research in Motion and Apple.

Latin America Mobile Handset Forecasts
Forecast published quarterly
Our Mobile Handset Forecast products provide a complete picture of handset sell-through in each of 18 Latin American markets. The Excel output includes five years of historical data and five years of market projections for metrics such as total handset sales, handset sales by network technology, new handset sales (by technology, by technology generation, by feature set), smartphone handset sales, vendor market share and handset ASP. We believe our Handset Forecasts are superior because they capture sell-through (units sold to end users) rather than unit shipments (sales from manufacturers to distributors) and rely heavily on our Mobile Demand Forecasts. Moreover, they are based on extensive field research, and a consistent methodology that is applied to all markets.

Latin America Mobile Demand Forecast
Forecasts published quarterly
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