The battle for Brazil’s tech market is heating up

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Brazil is going through an economic boom. In December, it overtook the UK as the world’s sixth largest economy.

Much of Brazil’s success has come through changes within its agricultural sector where, over the past 40 years, it has focussed on the Soya trade. But Brazil’s success does not rest on agriculture alone.

Brazil has access to huge mineral resources and has recently struck oil. Its industrial sector has been picking up pace, and China has been taking notice.

Last year, China decided to step up investment in Brazil by ploughing over US$12-billion into the economy, with most of that going to the technology sector. This figure is significant when you think back to 2009 when China’s investment in Brazil was a mere US$300-million mostly dedicated to the agricultural and mining sectors. Now it seems all eyes are on Brazil.

A couple of days ago, news broke that Foxconn is allegedly planning on building five more factories in Brazil to start producing Apple products.

That’s not altogether surprising in itself, since Foxconn is already manufacturing motherboards and other hardware in Sao Paulo for companies like Dell and Sony. In fact, Forbes ran an article on a potential deal with Foxconn way back in May last year. At the time, Foxconn had various demands that needed to be met in order for it to start investing heavily in Brazil, which were mostly related to infrastructure and financial support.

Apple has probably also been putting pressure on Foxconn to overhaul operations. Back in 2010, the press was swamped with articles exposing the high suicide rate and poor working conditions for many employees in Foxconn’s Asian factories.

In the midst of the crisis, Brazilian billionaire Eike Batista seemed to be attempting to woo Apple over to Brazil. Since Batista’s many companies are geared to handling much of the core infrastructure in Brazil including mining, energy, logistics and shipbuilding and maintenance, it is quite possible that Batista’s influence may have helped to close this deal with Foxconn, and ultimately with Apple.

Apple isn’t the only tech-giant looking to get into bed with Brazil. This month, Microsoft opened its first Microsoft Technology Center (MTC) in South America.

The 14 000 square foot center, which takes up a sizeable portion of the United Nations Tower located in Sao Paulo, consolidates a US$10m investment from Microsoft and fifteen of its partners, including AMD, Dell, Intel, HP and Nokia. The center is largely designed to promote research and development around Microsoft technology within Brazil, and includes 700 terabytes of data center capacity and 360 high-powered processors, which can be dedicated to performing complex software simulations.

Microsoft also committed to opening MTCs in five other cities in Brazil including Rio de Janeiro, Salvador and Recife.

Michael Levy, Microsoft Brazil’s president, summed up the software giant’s agenda in the statement “Our idea is to strengthen the structure and the presence of Microsoft in the country. Let the country take advantage of the policy instruments at Microsoft to create new opportunities.”

Microsoft has good reason to want to try to strengthen its presence in the country. Brazil has traditionally been a keen fan of Linux and it would be fair to guess that the greatest distribution of Linux users is probably based here.

In fact, in December 2010 the Ministry of Education announced that it would deploy Mandriva Linux for educational use across the country on all ClassMate PCs.

That works out to an estimated 1.5-million installations of the operating system. Back in 2008, Brazil’s political future was entrusted to a Linux-based e-voting system which handled over 120-million votes.

But these decisions aren’t just made by politicians, most computer vendors in Brazil are quite happy to sell PCs with Linux installed as the default operating system. In fact, one online vendor considers one of its Linux PCs to be its biggest seller.

Brazil believes in its future in technology. Towards the end of last year, Brazil invested over US$2-billion of its taxpayers’ money in 75 000 science and technology scholarships. Many of these students will be sent overseas to study, in the hope that when they return they will drive the economy.

As the industry picks up pace in the country it is hoped that the increased investment will further help to close the incredible poverty gap that has grown in Brazil. For now, we can only sit back and watch the tech-giants battle it out for a piece of the pie that Brazil is becoming.

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