It would be hard to find a country where Apple Inc. products are more coveted and more difficult to buy than Brazil.
Brazil is the world's eighth-largest economy and one of its fastest-growing; it has more mobile phones per inhabitant than the US; its people spend more time on the internet than they do watching TV; they are passionate about social networks; and they love hearing music on digital devices. Even so, Apple, heralded as one of the most astute and revolutionary technology companies on the planet, all but ignores Brazil.
Apple has its own brand stores in the 10-largest economies in the world, except Brazil. Brazil's 190 million consumers are so far off Apple's map that they can't even buy music on Apple's online iTunes store. Worse, Apple doesn't export enough products to Brazil to meet local demand.
Inventories of the iPhone 4 disappeared almost instantly from Brazil's mobile-phone stores. Local operators set up long waiting lists, but gave up after they realised Apple wouldn't be sending more devices soon.
Lacking alternatives, better-off Brazilians who hunger for iPhones, iPods or iPads buy them outside Brazil — or on the local black market, where they can cost two to three times the manufacturer's suggested price. Even when they pay inflated prices, Apple doesn't provide Brazilians with adequate technical assistance. It's hard to imagine an international brand that treats a huge group of potential customers with such casual neglect.
In March, Brazil's O Globo newspaper reported that Apple Chief Executive Officer Steve Jobs was invited by the city of Rio de Janeiro, to open the company's first store in Brazil. Jobs replied: "We cannot even export our products, with Brazil's crazy policy of super-high taxation. This makes it very unattractive to invest in Brazil."
It is true that the Brazilian tax burden borders on the obscene; it also makes imported electronics sold in Brazil among the world's most expensive. But this didn't prevent Apple's main competitors from opening plenty of stores in Brazil, and transferring part of their manufacturing to the country.
An example is Samsung Electronics, which has just begun selling its new Galaxy Tab in Brazil. While the iPad has yet to be introduced in Brazil, Samsung's tablet already is being manufactured in Campinas, a town in the interior of Sao Paulo state.
Another is Nokia, which has been manufacturing in the Manaus Free Trade Zone in the Amazon for 12 years. Sao Paulo and Manaus also host production lines of Motorola Inc., Sony Ericsson Mobile Communications, LG Display Co., Siemens AG and Vitelcom Mobile Technology SA among others.
In almost all these cases, it was the high cost of importing that motivated these companies to take advantage of the tax benefits offered by the Brazilian government for producing locally.
When citing high taxation to justify Apple's sub-minimal presence in Brazil, Jobs shows that he still sees the country as merely a consumer of imported products, while his competitors see Latin America's largest economy as a producing and exporting centre, as well as a big consumer market. Other economic arguments shoot holes in Jobs's justification. In recent years, the increase in the minimum wage and greater availability of credit has increased Brazilians' purchasing power.
Today, a Brazilian needs 9.6 times the minimum wage to buy a basket of digital products versus 10.1 times a year ago. The Argentine consumer, by comparison, needs 14.7 times his minimum wage to buy this basket of products, according to a study by Marco Marketing Consultants.
Along with the economic evidence, Apple also seems to leave out of account, or doesn't know, the profile of the Brazilian consumer.
Brazilians who have access to computers already spend more time — 30 hours a week — on the Internet than watching TV (17 hours). And it's hard to imagine a people with a greater penchant for social networking through Facebook, Twitter and Orkut, a Google-owned site run out of Brazil.
Last month, Brazilian entrepreneur Eike Batista, ranked No. 8 on Forbes magazine's list of the world's richest people, said that he is negotiating to set up an Apple assembly plant in Brazil. When he uses an iPhone 4 — bought outside Brazil — to phone Steve Jobs I hope Apple's CEO takes the call. I have a feeling his shareholders, and Brazilian consumers, will thank him.