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November 14, 2011
After being a laggard in smartphone adoption, Latin America’s smartphone sales picked up the pace in 2010 when smartphone sales in the region grew 117% and total handset sales grew 17%. In 2011 smartphone sales will represent 17.9% of total handset sales and will continue to be the fastest growing category, increasing at a CAGR of 30% in the next five years, compared with a 7% CAGR for overall handset sales during the same period. By 2016, we expect smartphone sales to account for roughly 46% of total handset sales in the region.
Exhibit 1: Latin America smartphone sales as percentage of total handset sales, 2008–2016
Source: Pyramid Research
Mobile penetration in Latin America’s mobile market surpassed 100% in 2010. As the market hit the 100% mark, operators started to look for ways to grow beyond subscriber acquisition. The answer was already at hand ― data.
Data has become the new source for revenue growth in Latin America. America Móvil’s Q3 results report year-on-year increases in mobile revenue, clearly driven in part by data revenue growth. In Peru, for example, mobile revenue in Q3 2011 increased 16.8% year-on-year, while data revenue surged 55.6% in the same period.
Exhibit 2: America Móvil's total mobile revenue and data revenue increase for selected countries, Q3 2011
Sources: Operators, Pyramid Research
Operators are determined to leverage their 3G networks and increase data revenue. To access data services, users need smartphones. In my recent insider, Operators and Vendors Aim Smartphones at the Mass Market, I discuss smartphone sales growth and the drivers supporting this growth.
Pyramid Research expects smartphone sales in Latin America to grow 75.7% in 2011, equaling 31m smartphone units sold and US$6bn in revenue. Operator strategies ― such as wider smartphone portfolios; subsidies; and an increasing variety of plans, including prepaid data plans to address the predominately prepaid subscriber base in the region (82% of total mobile subscriptions are prepaid) ― are fueling smartphone adoption.
The increasing need to stay connected and the high penetration of social networks (Facebook has roughly 120m users in the region) are playing an important role in smartphone adoption. Latin Americans want smartphones, but the main barrier to adoption so far has been the affordability of such devices. Competition among handset vendors and the increasing availability of Chinese manufacturers in the region are pressuring smartphone prices down, putting smartphones within reach of the average consumer in Latin America.
— Fernando Pafumi, Director
— Juliana Gomez, Senior Analyst
Related resources:
Pyramid Research Latin America Smartphone Forecast
Forecast published quarterly
Tracks annual handset sell-through of total mobile handsets and smartphones for a ten-year period including five historical years and five forecast years. Smartphone sell-through is segmented by vendor and by operating system.
Mobile Social Networks Set to Experience Rapid Growth as Mobile Penetration Rates Rise
Latin America Telecom Insider published October 2011
Supported by the extremely high penetration of mobile devices, Pyramid Research believes that LA will be a major region in terms of mobile social network usage. The increasing investments in network quality, the availability of more data plans tailored to mobile social network users and the availability of more devices able to access data networks are the main reasons why Pyramid Research believes mobile social networking in LA will soon compare to more developed regions.
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