Catch-up time

There are close to four million computers in Brazil today. But this number might triple by the end of the decade. There's been a computer boom in the country since the government ended the so-called market reserve which prohibited the sale of imported machines. Prices have finally fallen down to close to the prices practiced in the US. And people are just starting to get into the Internet's bandwagon.

Elma Lia Nascimento

After years of being fed a diet of smuggled, over priced computers that cost as much as three times more than a similar product in the US, Brazilians have been caught in an increasing computer-buying frenzy since the so-called reserva de mercado a measure that imposed exorbitant taxes on imported hardware and software has been lifted by the government in 1992.

The market reserve was created as a means to protect an incipient computer industry in the 80s, but instead of propelling the machines' domestic production, the measure condemned Brazil to the basement of computer technology. The country has fewer computers per capita than smaller economies like Mexico, Argentina and Venezuela. Canada has a computer business three times bigger than Brazil's but this situation should change in only two years, according to Paulo André de Andrade, an executive with IBM of Brazil.

So hungry have been Brazilians for computers that 800,000 people packed São Paulo's Fenasoft, a five-day, 2,000-exhibitors computer expo in its ninth edition in July. People weren't discouraged either by the steep $30 admission price or by a 30-minute or longer wait in line. US Compaq, financing its computers in 10 months, was able to sell, only on the first day of the show, more than 1,000 units of the Presario CDS 524 ($330 x 10), just one of the models the company was showcasing. Apple Computers was also a big hit slashing prices on its Macintosh Performa 630 and selling more than $10 million in equipment. Bottom line: 60,000 computers sold in five days and $3 billion in business for Fenasoft.

Who was the biggest IBM reseller in the world last December? It wasn't any computer megastore in the US or Europe. The title was given to Unibanco, a Brazilian bank which through its Micro 30 Horas project and its 650 branches all over the country, was able to sell almost 32 thousand IBM items including Aptiva computers, accessories and software in one month. The program was part of a plan to get 100,000 clients on line by the end of 1996. The results came as a surprise to IBM and everybody else involved. In three months, 14,800 model-486 computers were sold at a price of $2,400 or 36 installments of $110.

IBM sold 69,000 microcomputers in Brazil in 1994, 30% of them to the home consumer. This represented a 125% increase in sales when compared to the previous year. Compaq, the second place in sales, sold 45,000 devices in 1994, this against 17,000 in 1993. The company expects to sell around 100,000 units this year.

The business world has been looking with covetous eyes to this Brazilian technological fever in a 160,000-people nation in which only 3% of the families (against 35% in the US) have a computer. Most of the population cannot even dream of having a computer, but 25 million people, that is, 8 million families are willing and ready to join the fun.

Experts have been trying to explain the late bloom and boom. They note that inflation has fallen in Brazil from close to 50% a month in the middle of 1994 to a much more manageable monthly rate of around 2%. This allowed a whole generation of Brazilians to see prices falling down instead of skyrocketing continuously. Last year computer product prices fell an average of 50% and a similar decrease in prices has happened this year. The decline in cost has continued in such a way that some products are just 10 to 20% more expensive than their similar in the US. The demand for computers has increased by 100% in 1994 and by the same amount again in 1995.

Until 1993, 75% of the computers being used in Brazil had been smuggled in the country in the whole or piece by piece and assembled in clandestine workshops. At the end of 1994 that ratio had fallen to 50%. The numbers should be inverted by the end of next year, when it's expected that 75% of the computers will be sold by the formal commerce. Prices have fallen so drastically that sometimes smugglers are not able to match the legal industry's prices.

New estimates have calculated the number of domestic computers at 1.5 million, even though only half a million of these machines were officially bought, that is, with all the papers and taxes. Brazil has today a market of close to 4 million computers, but this number might triple by the end of the decade. In the next four years the country should get more machines than it got in the latest 15.

None other than Bill Gates, Microsoft's chairman and Mr. Computer himself, has declared recently, "Brazil is today, together with Japan, one of the most attractive potential markets for computers." Not mere words. Microsoft is investing heavily in Brazil. The company has established its own factory in the country and Brazilians together with the rest of the world were able to get Windows 95 in Portuguese the same day it was released all over the world.

At the end of 1994, Microsoft had already sold 2 million copies of its DOS and Windows operating systems . Software is still very expensive in Brazil. Microsoft's Word for Windows, for example, a program used for word processing, costs more than $400. To circumvent this, pirates have distributed copies of the program through Rio and São Paulo street-vendors who charge $50 for the software. With the reduction of software prices and consequent decrease of software piracy Microsoft expects to triple its business in the next few months.

Every other computer multinational seems interested in getting a slice of the excitement. IBM has taken the lead in the hardware department and has been selling its notebooks made in Brazil since the end of last year. The company has become the number-one seller of computers in the country with a 30% share of the market. Olivetti, the European giant, famous in the past for its line of typewriters, has opened its computer factory in May 1994 in the interior of São Paulo. World-leader home-computer seller Compaq, in partnership with Microsoft, has started aggressively. It has a ability to produce 400,000 computers a year, which is the total capacity of market right now. Having started production in their Jaguariúna (interior of São Paulo) factory in October 1994, their plan is to win 25% of the Brazilian market in the next few years. Japanese Toshiba and American Digital have also big plans for Brazil. After much consideration and assurances that the piracy problem was disappearing, Apple also decided to participate in this gold rush. According to Luis Rubio, Apple Computer's general manager for Latin America, Brazil is on the top of a five-country priority list for emerging markets, in front of China, Mexico, India and South Korea.

There is another motive behind all this interest in manufacturing in Brazil: as it happened before with the auto industry, the government is giving enough incentives to convince even the more skeptical companies like Apple to pitch their tent in the country. The Ministry of Science and Technology, among others, is giving the firms IPI (industrialized products tax) exemption. The new Lei da Informática also grants reductions of up to 50% in income taxes to computer manufacturers. To get these benefits, however, the companies have to invest in research and development and manufacture the computer components, including the CPU (Central Processing Unit), in Brazil.

The informática sector as the computer segment is called in Brazil is growing 25% this year. This means that the country is counting on closing the year with a volume of $8 billion in sales of computer hardware and software. Jorge Schreurs, Compaq of Brazil's president, estimates that 750,000 new computers will be sold in Brazil this year alone. This in a global market of 70 million such devices, with 8 million being sold in the US alone. There are estimates that the Brazilian market for microcomputers including hardware and software is around $5 billion. More than $1.5 billion are coming from the so-called Soho (small office home office) market. By comparison, this same market represents an annual $13 billion business in the US.

In a new phenomenon in the country, at the beginning of the year computer manufactures found out in a mix of delight and despair that they weren't able to deliver all the machines ordered. To get an IBM Aptiva equipped with multimedia, the wait on line was taking one month. The delay was similar for those willing to get their hands on an Apple's Performa 630 or a Compaq's multimedia Presario.

In a study conducted by Claim e Andersen Consulting and published by newsweekly magazine Veja in June, it was revealed that 1/3 of the so-called classes A and B (the very rich and upper middle class) have computers at home. This is the same level of computer ownership for the US. For class A alone, the rate is a computer for every two homes. According to Claim e Andersen, there were 1.24 million machines in these homes, with 520,000 of them owning modems and 395,000 having multimedia capabilities. A whole two thirds of these devices were smuggled in the country mostly from Taiwan, Singapore and Miami. The data came as a revelation to many, since the computer industry itself used to estimate the number of home computers at less than half million.

And how are these computers being used? To play games (according to 86% of the owners), to do office work at home (84%), and to do school work (72%). While in the US the home computer is used an average of three hours a day in Brazil its use is only one hour. In many cases the machine sits there mute and immobile, more as a symbol of status than as a useful tool.

Another sign of the computer democratization is the places the products are being seen in lately. Until very recently only specialized shops sold the machines. Nowadays they can be found at electronic stores like Casa Centro, hypermarkets like Makro, camera stores such as Fotoptica and even department magazines like Mappin. For Fotoptica this is their second attempt to sell computers. A first try in 1985 was abandoned since the company wasn't able to compete with the main competition at that time: smugglers.

São Paulo's biggest specialized store is Computer Place. Their growth is a mirror of what is happening in the computer market all over the country. In 1993, the super store sold $13 million in hardware and software. The following year that amount had increased to $40 million. Estimates for 1995 are the sale of 25,000 computers and $90 million in business.

In an interview with bi-weekly business magazine Exame, Silvio Modé seemed ecstatic with the results. "Computers are not seen as sandmen anymore," he said. "For us, every week is better than the one that just passed. I have customers for a megastore. What I don't have is product."

Even the best supplied stores, for example, have little more than 500 titles of software, less than 1% of what is available in the American market in which there are more than 100,000 titles.

More and more computers are being shown in bank lobbies not only for the clients use but also as a sample of the product sold by the financial institution. Besides IBM, other big computer manufacturers like Acer, Hewlett Packard and Compaq have signed agreements with the major banks to market their machines. Strict regulations from the Central Bank don't allow financing for more than four months to individuals, but self-employed people and companies get a break, being able to buy their computer in installments up to 36 months. Charging monthly interests from 5% to 7% the proposition is a license to steal, but to some consumers that's the only way they can get ahold of what has become a necessity. Banks and clients get another perk: the computer comes with an installed program that makes the buyer's terminal an extension of the institution in which he has his account.

Brazil is trying to catch up also on the way computer is used in business. Banks are in the forefront of this revolution with their home banking projects. Brazilians have known electronic tellers since the 80s, but their use only became common place in the last few years. In 1990 there were only 4,200 of these machines in the country. Their number had jumped to 20,000 in 1994, and they were responsible for 1.4 billion transactions. By comparison, in 1994 Americans made 7.2 transactions in 100,000 automated teller machines.

Some supermarkets and stores, after having adopted computers to read bar-coded products are starting to offer virtual shopping in which the client buys via computer screen and receives the products at home. The Pão de Açúcar supermarket chain, the second largest in the country, has pioneered the concept of on line purchase in Brazil.

For now, only Paulistanos (those from São Paulo city) will be able to shop via computer. But come March the project will be implemented also in the interior of São Paulo, and the states of Rio de Janeiro and Ceará. The client gets a CD ROM with 3,000 products contained in the supermarket's shelves. Only fruit and vegetables are excluded from the list. Apparently Brazilians won't buy these items without touching them first. The images the customers gets when clicking in the different sections are those of the products wrapped in their packages. Another click gives a close up of the desired item showing its price.

The call is free and a typical purchase shouldn't last more than five minute. Options to pay are charge and check. Pretty on paper. But in real life, the buyer will have to deal with computer crashes and phone lines often as busy and temperamental as the weather. Besides, while the real shelves will be getting new products every day the virtual ones will be updated only every three months.

Some Brazilians are having experiences that most people of the first world have only heard of. Take the example of the smart card. A few pioneers have been "charging" their card in electronic tellers with a certain amount and then using it to pay small bills like gas, medicine and lunch. Or look at what the clients of Pernambuco's Mercantil bank are doing with their $300,000 project called "hand bank", in English.

All 17,000 customers were offered palmtop computers that can access the bank's central files 24 hours a day. Bradesco, the biggest Brazilian private bank, has been offering its services, among other ways, through video games. All parents have to do besides persuading their children to give the machine for some minutes is to insert a special cartridge in the device and connect it to the phone.

And believe it or not, Brazil, which has more than 1,000 companies developing software, has been exporting software to the first world including an operational system to the US Army. This was a $1 million business coup executed by São Paulo's Microbase, which sold 2,500 copies of its VirtuOS 386 to the American military.

Australia, Japan and the US also bought 3,000 copies of Xpost, an electronic mail program created by Lantec, another company from São Paulo. Amerinvest, developer of the Autoprogram, a program that creates other programs, has opened a branch in Florida, after its success in Spain.

Brazil is only crawling, however, when the subject is the production of CD-ROMs. Among the pioneers are Folha de São Paulo which put on disk the entire 1994 text of that daily newspaper and Editora Abril which publishes its Almanaque Abril also on CD.

The first pornographic game on CD-ROM was released a few months ago. Mister CD-ROM, the company responsible for the exploit, had a stand at the Fenasoft with Silvana Maria, the star from "Sex, o Jogo". Fans were so excited by the presence of Silvana that they ended up breaking a window to get closer and touch the actress. Some 1,000 of them bought the game at $40 a piece.

Pluggled in the world

Like the rest of the world Brazil is entranced by the Internet. But it has been a more than bumpy road to get to the promised information superhighway. At the beginning of last year there were only 3,600 computers connected to the Internet and all of them were in universities and schools. Half of them in São Paulo.

It was in 1989 that Brazil had its first taste of the Internet thanks to an agreement between the Instituto Brasileiro de Análises Sociais (IBASE) and the California Institute. Starting in 1993, the Ministry of Science and Technology's Rede Nacional de Pesquisa (RNP) took over the control of the Net.

Only at the end of 1994 big companies were able to be part of the Net. Before that they were making do by utilizing alternative systems like BBSs (Bulletin Board Systems) which were being used as intermediaries to the Internet and allowed group discussions among the members of the closed club. Some big BBSs in Rio and São Paulo have more than 10,000 members. That's the way Microsoft do Brasil, for example, was getting E-mail.

This situation can only be explained because until recently the exploration of all communication in Brazil was a monopoly of the state. When Embratel, the state organ in charge of communications, started to accept applications at the beginning of the year for the Internet, there were 18,000 people in line (not on line). With the opening of the market to private companies to provide services it's expected that 200,000 people will be connected to the Net by year's end.

When Embratel finally announced the prices to access Internet there was more than a little grumbling. The company created a matriculation fee of $35 plus a monthly basic tariff of $50 for 15 hours of the Net's use. Every hour after that costs $3. These prices don't include taxes or the telephone call itself. Only in October the first private companies started to offer access.

All of them have to buy the phone lines from Embratel and then resell the service to the public. Rio's CentroIn, for example, is charging $23 for registration, a $26 monthly fee that guarantees 20 hours of use, with each extra hour costing $3. Some internauts were venting their anger at soc.culture.brazil, a very active forum for things Brazilian in the newsgroup section of the Internet. After describing a series of problems with his E-Mail, a disgruntled customer wrote: "We are making believe we have Internet. The worst part is that the world out there believes that we do have it."

There are still few Brazilian pages in the Word Wide Web, Internet's graphic showcase, but this number is growing fast. At last count there were close to 1,000 personal and commercial homepages, as the sites are called in internetese. Besides such big companies like IBM and Microsoft which want to advertise their products, some big publications have already given a taste of their goods. Rio's Jornal do Brasil was the first to publish a daily on line issue. It's still the most complete of them.

Rio Grande do Sul's Zero Hora and Rio's O Globo have their own weekly computer supplements in their site. Folha de São Paulo, the paper with the biggest circulation in the country, and O Estado de S. Paulo have a more symbolic presence on the WWW. Most of the information put out by O Estado can only be accessed through paid subscription. Interestingly all major Brazilian newspapers have weekly supplements dealing with computers. They are informative, full of ads and run for 20 pages or more.

Despite all the commotion around Internet even people we assume would be well informed sometimes don't know exactly what the name means. In a recent survey of Brazilian executives by Manager, a poll company, 50.1% didn't answer correctly the question: What is Internet? It's a data bank that can only be accessed with the US government approval, responded 26.1%. Another 12.5% said that it was a software network created by the Brazilian government and 11.5% preferred to leave the question unanswered.

Only 49.9 knew it was a worldwide network of computer networks linking millions of people. But that was before Globo network made the word Internet a household word. Read box about soap opera Explode Coração.

High-tech soap

Explode Coração, Globo's new prime-time novela (soap opera) may have many gorgeous and charming characters but none so hip and multitalented as Internet. Heroes and villains are connected through a computer and Internet. The world computer Net is arguably the main character in a time slot that traditionally guarantees Globo a share of close to 50% of the TV audience in Brazil that means 50 million people, the same number of Net users all over the world the immense majority having never touched a computer.

Newspaper's TV supplements talked for months before the novela started about all the research Glória Perez, the author, had done, including exchanging ideas with internauts from all over the world through E-mail. As a good feuilleton, Explode Coração has all the obligatory corny ingredients: a beautiful young woman whose family expels her from home when she falls in love with someone who doesn't share their ethnic background, a heartless businessman worried only in advancing his career, the confrontation between traditions and modern life. It also has its share of weirdness with a drag-queen fighting to adopt an HIV positive kid and a nightclub dancer searching for her kidnapped son.

Dara (Tereza Seiblitz), the heroine, inspired on a real-life character, is a gypsy who starts a romance with a Brazilian businessman, Júlio Falcão (Edson Cellulari) whom she meets through the Internet. Falcão is in Japan on a business trip when he first listens on line to the frustration of a young Brazilian gypsy.

"I was intrigued by the way the Internet is capable of connecting the most weird and different people," said Perez in a recent interview. "In the Internet these chance encounters, which would be considered novela stuff, are happening all the time." The plot has also a timid computer whiz called Edu who on line becomes a most charming seducer.

"What reality separates, this screen links," says Júlio Falcão referring to the computer monitor at the beginning of the story. For Falcão and for all the others the Internet connections are always fast and clear. The Internet of Explode Coração is full of whistles, images and sounds, much slicker than the real thing and without all the glitches that normally plague the Net.

The novela has generated another novela on Internet itself. Some habitués from the Brazilian forum soc.culture.brazil have been charging Perez with the crime of misinforming the public about the real Net. Internauts can be very sensitive. "It seems incredible that someone who looks so well informed as the author would show the main characters connecting through Internet in a way at least curious, not to say weird, " wrote a dissatisfied spectator. "I felt personally insulted by the way chat is presented in the Net," wrote another one. Some were even less charitable accusing the writer of crass ignorance. At the end, the relax-it's-only-fiction gang intervened, with a forum user commenting, "I cannot understand this jealousy for the Internet reality. Let's not forget that Glória Perez has poetic license."

Now, best-seller writer-journalist-politician Fernando Morais, whose "Chatô o Rei do Brasil", about media mogul Assis Chateaubriand, was the most talked about book of 1994, is also joining the Internet bandwagon to write his next book. His theme is the "20th Century's history underground" and he wants to hear from anybody who has heroic or less than heroic stories which haven't been adequately told. He has set up shop in the Net ( E-mail address: morais@sol.uniemp.br ) and is open to suggestions from all over the world.

Come surf with us

News from Brazil has been on line on the WWW since June. Our address is http:www.earthlink.net/~brazzil. At our site you can jump directly to these and some other Brazil-related pages:

Publications:

Agência Estado - O Estado de S. Paulo news agency - In Portuguese: http://worldnews.net/estado/estadopub.html

Diário do Nordeste - A taste of the Brazilian Northeast - In Portuguese: http://www.etfce.br/~diario/

Folha de São Paulo - Tidbits of Brazil's largest daily - In Portuguese: http://www.embratel.net.br/infoserv/agfolha/index.html

Jornal do Brasil - Rio's daily newspaper - In Portuguese:

http://www.ibase.br/~jb/

O Globo - Computer supplement of this Rio's daily - In Portuguese: http://www.embratel.net.br/~oglobo/index.html

ZH Informática - Computer supplement of Zero Hora - In Portuguese: http://www.embratel.net.br/infoserv/zerohora/index.html

Literary Texts - A collection of Brazilian authors' excerpts - Portuguese & English: http://www.cr-sp.rnp.br/literatura/autores.html

Brazil Report - Economic news - In English: http://www.softopt.co.uk/latin/brazil.html

Universities & Institutes:

University of São Paulo (USP):

http://www.embratel.usp.br

Pontifícia Universidade Católica do Rio de Janeiro:

http://www.puc-rio.br

Cardiff University of Wales - Brazilian Society:

http://www.cf.ac.uk/uwcc/suon/brazil/braz-soc.html

Entertainment & Music:

Escola de Samba Império do Papagaio - From Finland: http://www.eunet.fi/papagaio/papagaio.html

SambaLá - From Los Angeles, USA:

http://www.webcom.com/~sambala

Brazil Music Home Page:

http://pasture.ecn.purdue.edu/~agenhtml/agenmc/brazil/bmusic.html

Links of links:

Point Survey - Brazil - Top rated Brazilian WEB places:

http://www.pointcom.com/cgi-bin/pursuit-gif/?brazil

Yahoo Brazil:

http://search.yahoo.com/bin/search?p=brazil

Brazilis Index Service: http://www.embratel.net.br/infoserv/asi/brazilis/is/is.htm

Web Central Brasil: http://www.magics.com/bus/brazil/brasil.html

Webra Catalogue: http://www.embratel.net.br/infoserv/webra/