USA Today Article on Brazilian Software

U.S. tech companies give Brazil a go

BY THE NUMBERS
Population: 190 million.
Size: 3.3 million square miles.
Gross domestic product: $943.6 billion.
GDP per capita: $8,600.

Source: CIA World Factbook
By Michelle Kessler, USA TODAY
SAN FRANCISCO — Step aside, India and China. Brazil is the latest country with an emerging economy to attract big investments from U.S. tech companies.

Brazil, which is slightly smaller than the USA and has about two-thirds the population, has long had potential to become a significant tech market. But economic instability hindered growth.

Now that's changing. Tech spending in Brazil is expected to jump to $32.3 billion in 2011 from $20.5 billion this year, researcher IDC says. U.S. tech firms moving in include:

•Dell. The No. 2 PC maker this month opened a major assembly plant near São Paulo. Dell eventually will have about 1,200 employees in Brazil — about double what it had in 2005.

•Draper Fisher Jurvetson. The prominent Silicon Valley venture-capital firm opened its first Brazil fund this month in partnership with a local venture company. It has $40 million in capital, and a second fund worth about $100 million will follow soon, managing director Don Wood says.
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•MySpace. The social-networking giant, now owned by News Corp., plans to launch MySpace Brazil this summer.

Other companies are making similar forays. Brazil veteran IBM recently announced a partnership with local video game company Hoplon Infotainment. Since Portuguese is Brazil's official language, Mozilla is touting a Portuguese version of its Firefox Web browser. Intel launched a $50 million Brazilian venture fund.

Brazil is growing fast, and, "We'd like to be part of that," says Terry Kahler, Dell's vice president for Latin America.

Brazil's economic growth has been stunted for decades by inflation exceeding 70% a month at times, says Patrice Franko, an economics professor at Colby College. Years of reform are bringing Brazil's currency, the real, under control, she says.

The financial turmoil left a mixed legacy. Brazil's per-capita gross domestic product is about $8,600, compared with $43,500 in the USA. But Brazil also has a highly developed banking system and entrepreneurial spirit, Franko says.

Now, due to the more stable currency, "We have a middle class emerging," says Elber Mazaro, marketing manager for Intel Brazil.

Growth isn't limited to U.S. companies. Brazil's largest PC maker isn't Dell or IBM, but Positivo Informática in Curitiba.

Doing business in Brazil remains difficult. Taxes are high. Brazil has a thriving market for illegally imported goods, Kahler says. Plus, the gap between rich and poor — some in drug-ridden shantytowns — is rising, Franko says. That's led to an uptick in violence. Foreign workers "are living in privatized security enclaves in order to protect themselves," she says.