January 25, 2005

As Latin America enters a period of economic recovery, companies in the region want to increase their operations, become more profitable, expand productivity and grow - without having to use more resources.

In this climate, hundreds of companies are turning to Cisco Systems to migrate their voice traffic to the data network and take advantage of the efficiencies and savings of convergence, thus increasing their competitiveness and their workers' productivity.

Roberto De la Mora, IP Communications manager at Cisco Americas International, leads the company's programs to help companies in the region migrate to IP Communications (IPC). He spoke to News@Cisco about the IP telephony market in Latin America, what drives companies to migrate to IPC and some of the benefits the technology offers.

How does the IP Communications market in Latin America compare to markets in other regions?

Roberto De la Mora: It's a developing market. In terms of communications, Latin America started to develop late, in comparison to other regions. But this, in a way, is an advantage. Many of the new networks that have been installed recently in some Latin American countries are newer than those that are being used in parts of the United States, for example.

Most of the Latin American markets here are still somewhat unstable, both economically and politically. But they cry out for more economical and efficient solutions, not only from the point of view of cost per telephone, but also in overall operations.

There are also some cultural reasons why the region has lagged behind in IP telephony penetration, particularly in markets such as Brazil. When ATMs were first introduced, people were afraid to use them, for example. But now everybody uses them.

So, when the adoption stage reaches Latin America, people embrace it. And it's precisely now that we are about to embrace IPC, as has happened with other technologies.

What is the size of the telephony market in Latin America?

Roberto De la Mora: It is estimated to be around US$500 million and is divided into three large groups.

The first group consists of small companies, micro-companies and small offices/home offices (SOHOs) - a market whose particular telephony needs are served by service providers. The second group is medium-sized companies - those with approximately 25 to 100 telephone installations; this is a very large market. Finally, the third group is made up of companies with more than 100 telephone installations.

Cisco is directing its communications implementations at the last two groups - a market that is estimated to be around US$350 million.

We address the smaller company market by strategic relationships with service providers, where we can provide value-add for implementations in Internet access, telephony, unified messaging and many other services.

What types of companies do you see migrating to IP Communications?

Roberto De la Mora: All types of companies are seeing the benefits of IPC.

One segment that is taking this technology very seriously consists of companies that have multiple branches, such as supermarkets, banks and restaurant chains. These enterprises, in particular, are pouring themselves into IPC as a way to increase their operations and become more efficient.

Medium-sized and small companies that are just starting out are also adopting IPC because they can save on implementation costs. For example, if they're going to install a data network for their computers, they can connect their telephones on the same network. This way, they save on equipment, labor, implementation time and management costs.

And lastly, there are the large companies that are expanding or opening up new areas in their offices. These companies, which already have an infrastructure, prefer a hybrid approach: they continue with what they have, but their new installations are IP, and thus, they start building a total migration plan.

Why are companies turning to Cisco Systems, specifically?

Roberto De la Mora: At Cisco, we deliver a complete, end-to-end IPC solution that is compatible with what companies already have installed.

These companies can migrate towards IP at whatever rate suits them. If they need to migrate slowly because of risk and investment schemes, for example, Cisco can accommodate that.

The advantage in that Cisco offers a 100 percent IP solution. This allows for the delivery of all the benefits this technology has to offer. The further a company strays from a full IP implementation, the less savings, functionality, flexibility and network intelligence it will realize.