Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
In the past six years, thanks to increases in income and employment, credit with longer terms and lower interest rates, as well as social actions promoted by the government, the so-called class C population — which comprises families with a monthly income between R$1,200 and R$5,174 (about U.S. $660 to $2,850), according to the Brazilian Institute of Geography and Statistics (IBGE) — has increased 62%, to more than 105 million Brazilians, according to data from higher education institute FGV, and members of class C have drastically changed their spending habits and are part of the strategy for businesses that work with mass services and products in the Brazilian market.
Some of the changes in the spending habits of the class C population can be seen in the mobile phone market, as shown in research from Instituto Ipsos: about 40% of the owners of features phones are planning to acquire a new device in the next six months, and more than 80% use the Internet with their smartphones, being 47% 3G. It is not surprising that mobile phone carriers and device manufacturers are looking forward to Christmas sales this year, when the best-selling items will be smartphones and the data plans accompanying them, helping to increase the paid services base.
All that interest is tightly connected to the fact that smartphones are the access door for many Brazilians, concentrated in the class C, to a Web experience, especially in social networks. Nowadays, Orkut is regularly accessed via mobile devices by 56% of that population, and Facebook is accessed by 50%, in addition to other portals, according to Ipsos.
On the other hand, there is still a lot of room for evolution in that environment because there are few products and services exclusively developed for mobile devices. Most of them appeared for the first time on the Web and were adapted to fit a smaller screen. The ways in which mobile services are disclosed and monetized also are changing.
In the case of service usability, most Web companies end up only adapting the size of the screen, but they do not take advantage of the convenience provided by mobility to enrich the experience, reduce the number of browsing steps on a smaller screen or remedy the issues related to different devices and user agents that affect user experience.
Another issue is the way in which mobile services are disclosed. Mobile traffic in Brazil has skyrocketed in recent months, so it is crucial to know the best channels to successfully reach class C consumers. Because the inventory is still in formation, it is not cheap, and the efficiency to acquire volume with low costs demands much analysis and follow-up to not waste company resources while creating the user base.
Finally, there is the issue of monetizing services. Even though mobile payment rentability is not the most appealing because of the value chain high costs, it is the only payment method reaching 100% of the user base in a secure and fast way for lower fees (up to R$25), unlike credit cards, which are not very practical because of the amount of data users have to fill in and also because there is some resistance from the public to them, for security reasons. Besides that, only 46% of classes C and D have bank accounts, that is, have access to the Brazilian banking system, and of that population only 50% have credit cards, according to Instituto Ipsos. Therefore, high volumes are compensational. Still, the main players, such as the carriers and companies offering micro-billing and media solutions, are getting organized to offer the best conditions for Web companies to successfully offer mobile services in Brazil.
*Fernando Pensado is the country director of Neomobile in Brazil. Read his columns.
