Qualcomm is looking to take advantage of Latin America’s relatively modest 3G penetration rates to boost its influence and revenues in the region.
As part of this, Qualcomm said it was also looking to participate in the Brazilian semiconductors value chain and does not discard installing a research and development center in the country. Qualcomm said it aims to be part of Brazilian government’s recently announced plans to bolster the country’s wireless infrastructure.
“We are evaluating how we could contribute to Brazil achieve its goals in expanding broadband and ICT,” noted Qualcomm’s president for Latin America, Rafael Steinhauser, during a press meeting Nov. 9.
Qualcomm’s senior director for governmental relations, Francisco Giacomini Soares, added that for a year the company has been in talks with Anatel Ministries of Communications, Science and Technologies and Development, Industry and Foreign Trade. The company wants to identify opportunities to be part of the national development plans. “We are evaluating the actions of government incentives for companies to produce here. So we want to see what might interest us,” Soares explained.
While developed regions are migrating to 4G networks and deploying LTE technology, there is still a long way to go in Latin America as 3G is still in its infancy.
“The region is booming and we see a tremendous field to grow. For example, only one in five cellphones sold in Brazil is smartphone,” said Steinhauser.
However, the uptake of 3G services depends on several factors, including increasing network coverage and quality, lower terminals prices and more affordable 3G data plans.
According to IDC, smartphones represent only about 15% of the installed device base in Latin America.
Steinhauser noted that the reason why users are not selecting 3G devices is because they don’t see the benefit of paying more for current services. As an example, the Steinhauser highlighted the lack of applications focused on lower social classes. In Brazil, people from the so-called “C” class may represent 58% of total population by 2014.
“It is necessary to build a local applications environment. We want to deal partnership with local firms to develop customize application for Brazilians,” Steinhauser explained.
Qualcomm has implemented a program in China that it claims has helped develop customized application development that are produced locally and focused on the country’s population. Qualcomm noted that this has helped 3G adoption across China.
In a recent survey of Brazilian consumers, Nokia Siemens Networks reported that by 2015 there will be 95 million 3G/4G users across the country. To meet this demand, backhaul will need to grow 11 times in comparison to 2011, as NSN estimates data traffic through 3G/4G networks could rise up to 50 times by 2013, at which point total revenue might reach $17.13 billion. However, to achieve this, Brazilian investments focused on increasing data capacity could hit $5.1 billion.
In Steinhauser’s opinion, 4G, mainly with LTE-Advanced, represents a significant opportunity for carriers as the technology provides not only improvements in voice and data, but will allow smartphones to become more interactive. “We are aggregating many features into the chip to add more intelligence to cellphones, so they can interact with their owners and the external environment,” explained Steinhauser.
Qualcomm is also working to incorporate features from recently acquired Atheros, Gesture Tek and HaloIPT. Qualcomm paid $3.1 billion earlier this year to buy Atheros, which is set to add more network capacity and functionality through wireless local area network implementations.
Qualcomm expects to continue posting growth in emerging markets, boosted by the increase of 3G services and the further growth in smartphone sales. Globally, the company is also eyeing the expansion of mobile computing and 3G connectivity beyond cellphones, reaching televisions and others appliances.
Those expectations have been bolstered by recent reports, including one from Ericsson that predicts mobile data traffic will grow 10-fold between 2011 and 2016 – mainly driven by video – and that mobile broadband subscriptions are expected to grow from 900 million in 2011 to almost 5 billion in 2016. Along with these connections, Ericsson expects traffic generated by smartphones to increase 12-fold to roughly equal traffic generated by wirelessly-connected personal computers.
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