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Digital Latin America, Hungry for a Bigger Slice of Apple's Pie

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The time for widespread digital innovation in Latin America is now. This paradigm shift --fueled by an increase in economic growth, accessibility to technology and round-the-clock information, and a booming entrepreneurial ecosystem -- is changing the game for Latin America. For most Latin Americans, their first access to the internet will be through a cellphone, as opposed to a computer. For these reasons alone, the new iPhone would do well in Latin America, creating a big opportunity for Apple in the process.

It is important to remember that Latin America is not one homogeneous block, despite similar regional features. Although some statistics show that there is almost 45 percent internet penetration in the region, broadband penetration -- particularly fixed broadband connectivity -- remains low. Brazil, Mexico, Argentina and Colombia account for almost two-thirds of "connected society." Yet, none of these countries have a fixed internet penetration of more than 10 percent (ITU-IDB 2011). On the other hand, Latin America saw a 53 percent overall increase in smartphone sales in the first quarter of 2013, as compared to 2012 (IDC).

It should come as little surprise, then, that a 2012 study by the Inter-American Development Bank concluded that:

A 10 percent increase in broadband penetration (in Latin American countries) brought about an average increase of 3.19 percent in per capita GDP, increase 2.61 percent in productivity, and generate 67,016 new jobs.

I live in Mexico and travel extensively throughout South America and the U.S. I get to see the similarities and the differences between both regions. One key difference I see is the prevalence of Blackberry vs. the iPhone, in the business world of Latin America. In fact, a recent smartphone market share study by The Competitive Intelligence Unit in Mexico, shows that Blackberry maintains a lead with almost 25 percent of the market, followed by Samsung (21 percent), Nokia (15.3 percent) and Apple comes in fourth with a 14 percent share. Apple, in short, needs to catch up.

Moreover, in Brazil, consumers will have to pay upwards of $1,000 for an iPhone 5c, not only because of bearing the brunt of import taxes, but for of the fact that there, as in most countries in Latin America, prepaid service is the most popular plan. Few people can afford monthly service plans, hence they are out of carrier subsidies.

Last year I had the opportunity to participate with the B20 ICT and Innovation Task Force in which recommendations to global leaders were presented during the G20 Summit in Los Cabos, Mexico. Four "priority actions" were proposed, two of which stood out as providing benefit to a larger portion of the population in the shorter term. The first is to enable broadband for all, and the second: to develop content and applications for the public good-social inclusion through ICT.

These two elements carry so much significance because of their economic impact. Increasing internet connectivity allows web-based or app-enabled government, information, education or banking services to reach the critical mass needed to justify their existence. This increase in connectivity, meanwhile, maximizes the value of the broadband infrastructure.

While it may be the case that Apple is not focused on the low-end market, Latin America already exceeds 250 million people connected to the Internet -- just a few thousand people short of North America. Moreover, there is a startup boom underway in Latin America that is slowly but surely receiving the press it deserves. The term "Techno-Latinas," coined by Argentine entrepreneur Ignacio Peña, defines the tech-entrepreneur movement taking Latin America by storm. This new generation of Latin American technology entrepreneurs is young, eager, talented and thrifty -- the perfect components for success in today's lean corporate and recession-prone economic era. Couple this with the fact that Latin America received a record high foreign direct investment in 2012, and you get regionally ripe conditions for digital innovation.

Just take one look at start-ups like Sidengo, next-generation website builder based in Monterrey, Mexico or Atumesa, a food delivery platform also from Monterrey, or MilknCookies, a Guatemala-based agency for interactive digital development or even Transito Manaus a Brazilian-based traffic monitoring platform. All of these bright young companies are riding the new digital wave in Latin America -- a wave that relies on mobile applications to problem solve for today's social and economic concerns.

The time for widespread digital innovation in Latin America is now. The content and applications for the public good in the region are being created today, and they are being developed for the platforms people can afford, and know how to use. Apple knows the power of an app ecosystem, and its stickiness effect. It may be good for them to pay closer attention to what's going on south of California.