Brazil cloud computing sales to grow 74.3% over next three years

Brazil cloud computing sales grow
Info. Technology - Brazil
By Pedro Ozores - Wednesday, March 13, 2013

Sales of cloud computing services in Brazil will remain strong, growing at a 74.3% CAGR over the next three years and reaching US$798mn in 2015, ICT consultancy firm IDC forecasts.
In 2012, sales of cloud solutions expanded 68.4% year-on-year, while in 2011 they grew 57%.
However, due to particularities and the maturity level of the local market with respect to the technology, some cloud-based services are set to grow more than others, IDC general research manager for Brazil, Anderson Figueiredo, told reporters at the company's LA Infrastructure & Cloud Solutions Roadshow 2013, in São Paulo.
Such is the case with infrastructure-as-a-service (IaaS). Of the US$257mn IDC estimates will be spent on the cloud in 2013, most (US$123mn) will be spent on IaaS solutions, Figueiredo says.
"Iaas is the most visible part of cloud for corporates in Brazil, and also in the region, due to the growing virtualization process and increasing data center services being offered," said the analyst, adding that the recent tax exemptions for telecoms infrastructure, which includes data centers, should provide yet another boost to the market.
Another US$109m of the cloud expenditure forecast for 2013 will be spent on software-as-a-service (SaaS), with the remaining US$25mn going towards platform as a service (PaaS).
"Companies are still struggling to understand the PaaS offers and why they would need it. Furthermore, providers are having difficulty defining tailored PaaS business models and making their offers clear to customers. Anyway, PaaS utilization is very small," he said.
From 2013-2015, IDC predicts IaaS sales to expand at a 71.3% CAGR, SaaS at 81.2% and PaaS at 58%. According to Figueiredo, Brazil accounts for more than half of Latin American cloud expenditure

Brazil Cloud Computing - Companies Adaptation

Brazil Cloud Computing

21/02/2013 by Capital Information

Source: Digital Convergence - February 2013

A study conducted by Frost & Sullivan examined the intention of the companies to adopt cloud computing in the next two years in Brazil and Mexico, in particular with respect to Infrastructure as a Service (IaaS), Paas (Platform as a Service) or SaaS ( software as a service).

For Brazilian companies, 53% of interviews said they had a good knowledge, while 15% said they had a great knowledge. By the Mexican companies, 46.2% say they have good knowledge while 23% say they have a great knowledge about cloud computing .

Despite the good response, the consultant found that there are issues to be better explained to the market, especially regarding the safety of this new business model, which is still considered the main barrier to adoption. According to Bruno Tasco, an analyst at Frost & Sullivan, there is even confusion about providers really able to offer cloud computing solutions.

"When we asked companies about who would be the main providers of cloud solutions, we conclude that some companies had been cited by the simple fact possess a Datacenter, ie, there are still companies who believe that simply owning a provider to offer a Datacenter cloud computing, "he warns.

The survey finds that the consulting companies increasingly want to use solutions in the cloud, but the main focus is the private cloud environment. "We still have a long way to traverse to educate the market and reduce cultural barriers mainly related to security. Thus, companies have chosen to invest in private clouds for fear of having their infrastructure shared with other companies, " said Tasco.

Cloud Computing Users Prospective

Brazil - Who does what where?

Brazilian industry

Brazil has well-developed industries in sectors of agricultural, mining, manufacturing and services.

Brazil is the world's biggest producer of sugar cane and coffee, and a main exporter of soybeans, cocoa, orange juice and tobacco. Brazil is also one of the leading hydroelectric power producers of the world. Brazil's diverse manufacturing range from automobiles, steel and petrochemicals to computers, aircraft, and consumer durables. In the latest years the information and technology sector has gained major position in the Brazilian industry and accounts for around 30% of the country's total GDP.

Location

Due to historical reasons the Brazilian industry is mainly centralized in the southern part of this huge country.

The state of São Paulo has a strong focus on financial, manufacturing and agribusiness ventures, for example. Rio de Janeiro is the hub of the ongoing Oil, Gas and Energy boom taking place in the country, the main location for Shipbuilding and has strong service-oriented business opportunities as well.  Although some of these industries are located in both states, there is a growing presence of these same industries, and new ones developed, throughout the country as a whole. Few examples of Brazilian states that developed specialties in certain industries:

• Minas Gerais - Metal mining and Steel industry
• Rio Grande do Sul - Poultry farming
• Santa Catarina - Coal
• Ceara - Textile

Policy of Decentralization

For many years Brazilian governments have been doing intentional activities to decentralize the industry activity to other parts of the country.

Brasilia

The most famous acts of this decentralization policy, was moving the capital of the Brazilian republic from Rio de Janeiro to the rural area of Goias. The building of the city of Brasilia attracted a massive development to an area that previously was uninhabited, deserted and isolated. Nowadays Brasilia and the the Federal state is the third largest commercial center of Brazil.

Free Trade Zones

Free trade zones were created in order to promote the development of sparsely populated and remote areas, by creating special TAX regimes for import and export activities.

The first Free Trade Zone was declared in Manaus at the state of Amazonas on 28th of February 1967. The initial idea of the Manaus Free Trade Zone came from Deputy Francisco Pereira da Silva in 1951. For many years the project had very little national credibility and was realised actually with a single rented warehouse in the Port of Manaus. In 1967, President Castello Branco signed a law redefining the Manaus Free Trade Zone in more concrete terms. Following is the translation of the redefinition:

The Manaus Free Trade Zone is an area in which goods may be freely imported and exported and special fiscal incentives are offered for the purpose of promoting regional development, through the establishment of a thriving industrial, commercial, and agricultural center with the economic and financial conditions to foster local development in response to the area’s particular local factors and considerable distance from the major consumer markets

Decree-Law No. 288 of February 28, 1967

Nowadays, Manaus Free Trade Zone is an area with a radius of 10,000 km comprised of industrial and agricultural centers. The Manaus Free Trade Zone is directly responsible for approximately 100 000 jobs in western Amazonia, and additional estimated 400 000 indirectly related jobs outside the Free Trade Zone.

Following the success of this initiative, additional Free Trade Zones where declared in the northern part of Brazil:  

• Brasiléia and Cruzeiro do Sul in the state of Acre
• Bonfim and Boa Vista in the state of Roraima
• Guajará-Mirim in the state of Rondônia
• Tabatinga in the state of Amazonas
• Macapá and Santana in the state of Amapá

Along the years since the Free Trade Zones have been declared , more than 600 companies, including many of the world's largest enterprises, have established production in these states which by all means have some of the most disagreeable commercial locations in Brazil. Between the businesses established in the area, are companies like Nokia, Honda, Pepsi, Coca Cola, Panasonic, Harley-Davidson and many more.

Airports

Brazil’s land area is 8.514.876.599 km2 which obviously makes the distances between the various centers enormous, and even after many years of massive investments, in roads and transportation infrastructure, the country still suffers from poor land connectivity. To overcome this obstacle the brazilian government is in a process of building not less than 800 new industrial airports around the country,  to make distance areas accessible.

Brazilian Silicon Valley

In the last decades, due to the increasing costs of living in the main cities, and due to the high demand for professional, high educated human resources, many companies have searched for alternatives to locate their R&D centers. This search had led to the creation of several new high-tech industrial areas, called “Technology Parks”  mostly located near technology universities around the

country, facilitating the cooperation between the industry and the academic world. The federal and the states governments support this trend by providing various incentives such as low cost space and infrastructure, direct investments and  tax exemption. Each technology park has its own structure and benefits.

The biggest Technology Park is located at the city of Campinas. A modern city, located just outside of the giant metropolis, São Paulo. It has a vibrant, high-tech university and research environment, Campinas boasts a researcher/population ratio equal to those of the most advanced technology centers in the world.

Other cities have created technology parks, and are all aiming to become the next Brazilian Silicon Valley:

• Araraquara and São Carlos, both at the State of São Paulo, with high technology industries and Universities
• Recife at the state of Pernambuco, with a budding Digital Port and many collaborative ties with the UFP (Universidade Federal de Pernambuco)
• The Vale do Sapucaí and Belo Horizonte both located at the state of Minas Gerais, not properly a Silicon Valley because it has mostly a software industry, but the upcoming BHTec along with possible semiconductor industry developments in its metropolitan area could change this situation.
• Florianópolis at the state of Santa Catarina, also has mostly software industry.
• Rio de Janeiro, Porto Alegre, Curitiba, Blumenau and Londrina, all in the Southeast and South.

Summary

The increased investments in infrastructure and tax incentives in different states, along with the increasing and spreading of the population with more money to spend and consume new products and services around the country, created new opportunities and new locations for foreign companies to  invest in, or for them to establish their headquarters in the country. or in other words São Paulo and Rio de Janeiro are not the only Business cities in Brazil.