Return to the main menu for Mexico
Both the hardware and software industry in Mexico is booming. Hardware and software manufacturers are experiencing a great return on investment. During 1997, computers and communication gear experience a 37% growth in the Mexican market, reaching over US$5 billion. The expected growth is at 31% in 1998 and estimated revenues of US$9 billion by 2001 (24).
The increase in use of the Internet has also been very beneficial for the hardware and software markets. The number of Internet subscribers grew by 116% in 1997 from 1996, to over 400,000 and continues to climb. Hardware, representing almost 60% of market sales, is expected to grow at 25% a year over the next four years (25).
The Mexican government is adopting new technologies and promoting the use of information technologies. This trend will continue over the long term. Moreover, the trend will permeate the business sector thus enhancing opportunities for American suppliers.
Interconnectivity Software sales are expected to increase by 115% to over US$1 billion in 2001. Internet and fax software are also expected to expand its share of software sales from 6% to 19% in the same period (26). Some of the products/services of interest are: Fax Software, Modems, Notebook Computers, Power Packs, Pagers, Sound/Voice Boards, Multimedia, Scanners, Hand-Held Computers, PC Cards, PDAs, Portable Printers, Cellular, External Drives, Internet Software.
The competition between American, Asian, and European manufacturers in end-user equipment is, and will remain, intense in Mexico. The Mexican market for software totaled US $237.2 million in 1995 after decreasing 52.4 percent because of the peso devaluation. This market grew at about 15 percent in 1996 and 10 percent in 1997. During 1998-1999, this market is expected to grow at an average annual rate of 12 percent. American software suppliers account for around 79 percent of total demand for software. They are expected to retain their market share over the next three years (27).
The Mexican market for emulation software reached US $8.8 million in 1995, down from US $14.8 million in 1994. It grew 10.2 percent to US $9.7 million in 1996, and in 1997, growth was 15.4 percent to US $11.2 million (28). This market is expected to grow at an average annual rate of 10 percent during 1998-1999. Since Mexico does not develop or export emulation software, the total market equals total imports. Despite a decrease of 40.5 percent as result of the peso devaluation, the market is expected to grow at an average annual rate of 15 percent over the next three years.
The need for emulation software arose from the need to exchange information among computers designed in different ways. In Mexico, end-users use emulation software to: link computers for transmitting files, link computers to multi-user systems, link computers to information services and bulletin board services (BBS), link computers to peripheral equipment
Major Suppliers
Major domestic suppliers include: Administracion, Informatica y Servicios de Apoyo, CMS Sistemas, Ecomsa, EDS Mexico, Executrain, Grand/Tech, Grupo Cibernetica Genrencial, Grupo Tea, Infogama, Memorex Telex, New Horizons, SAS Institute, Servicios y Asesoria Integral en Telecomunicaciones, Siga Desarrollos Sistemas de Informacion IBM, Vertex 2000 (29).
End Users
Major end-users include banks, manufacturing companies, companies doing business in the tourism industry and retailers. Software developers sell software to wholesalers who only sell it to distributors, retailers and owners of small outlets. Foreign software developers sell their software through their Mexican representatives who import it through custom agents. The products are then sold to wholesalers. Approximately six wholesalers, 2,700 distributors and more than 11,000 retailers exist in Mexico. Wholesalers have countrywide coverage, while 50 distributors have regional coverage (usually in the largest Mexican cities). The three largest wholesalers have business relationships with major American wholesalers.
Software piracy can damage sales prospects in Mexico. The Business Software Alliance has a strong presence in Mexico and works closely with its Mexican counterpart, the Mexican Association of the Computer Programming Industry (ANIPCO). Legislation to protect software exists in Mexico. However, enforcement is weak because Mexican authorities have little experience in this field. In addition, Mexican legislation to prosecute is tricky thus making it difficult to penalize infractors. Although Mexico has strengthened its copyright protection laws, they are still difficult to enforce.
NAFTA provides business opportunities for American software and hardware suppliers. The expansion of the telecommunication infrastructure provides additional opportunities. Mexican customers are slowly but steadily upgrading their computer installed base. Also, American suppliers sell their products at an attractive price. They also provide excellent after sales support, including technical assistance. American suppliers have effective distributors and target their customers with proper sales promotional weapons.
Last update: December 18, 1998.
