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Tech Firms Go After Small And Midsize Business...Slowly But Steadily, Telecom Firms Make Their Moves

Tech Firms Go After Small And Midsize Business

Government, Local Tech Companies Continue Courtship


December 26, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

In the face of lagging sales of personal computers and other hardware, computer technology companies have set their sights on small and midsize businesses in Puerto Rico.

Microsoft, IBM, Oracle, SAP, Hewlett-Packard (HP), Sun, Dell, and others continue to target large corporations and the public sector. They deliver all types of computer services to several Puerto Rico banks, retailers, government agencies, and municipalities.

However, these companies spent the better part of 2002 aggressively pursuing the small office/home office (SOHO) segment, designing and marketing smaller desktop boxes. They’ve created partnerships with other companies to provide customers with multifunctional equipment, such as printers that copy, fax, and scan.

In September, Dell added copier maker Lexmark to its product lineup, each company hoping that the partnership will help in the battle for office equipment space. The HP-Compaq merger has allowed the new HP to showcase a wider variety of electronic notebooks, servers, peripherals, and other hardware, pushing hard to win customers over from its competitors.

For both the big and the small technology firms, landing a sales & service contract with the government is key to success. "Some tech company leaders in Puerto Rico say they find it difficult to market their products abroad without having the local government as a customer," said Antonio Sosa Pascual, executive director of both the Commerce Development Administration and Promoexport, the export promotion program for the government of Puerto Rico.

"These tech companies need the tools to market themselves here and elsewhere. They are better equipped to accomplish this with government agencies in their portfolio," Sosa said.

Promoexport organized a tech showcase in San Juan in September 2002. Dozens of local tech firms, particularly those that develop software and produce ancillary items, exhibited their products before local government representatives at the event, hoping to make impressions that would lead to contracts.

The Puerto Rico Industrial Development Co. (Pridco) is a key supporter of a science & technology movement designed to elevate the island’s profile as a hotbed of tech research & development. Several tech coalitions working closely with Pridco have developed a communications & information technology roadmap that charts the course for the island’s tech manufacturing industry, expected to generate more than 27,000 new jobs in the next five years.

The Puerto Rico Research & Commercialization Alliance, the Science & Technology Business Incubator, and the Puerto Rico TechnoEconomic Corridor are just three of a host of organizations fostering the generation of patents, incubator companies, intellectual capital, academic papers, and R&D with commercial applications.

Backing from the public or private sector, however, couldn’t keep Biometrics Imagineering from leaving Puerto Rico for the mainland in November. The firm’s products support electronic transactions for local banks.

Tech jobseekers might do well by finding opportunities within small and midsize businesses that need IT expertise. These small businesses are discovering ways to use tech hardware, software, and the Internet to find a competitive edge, to open new revenue streams, and to plan for growth.

According to a 2001 survey by the American Electronics Association (AEA), Puerto Rico has approximately 24,500 jobs linked to the technology and telecommunications industries. That means high-tech firms provide 34 out of every 1,000 private-sector jobs on the island.

The survey nevertheless ranks Puerto Rico behind the 50 states and the District of Columbia in terms of the average wage for high-tech employment, with an average annual salary of $31,249 in 2002.

"These statistics make Puerto Rico attractive for companies that want to keep costs down," said Matthew Kazmierczak, senior manager of research at the AEA. He acknowledged that local tech talent might continue to leave the market in search of better-paying jobs on the mainland and elsewhere.

Within the public sector, the central government’s Office of Management & Budget (OMB) is in charge of coordinating the work of information technology officers at scores of agencies. The IT-in-government program has 50 employees who watch over geographical placement, websites, telecom services, overall tech support and planning & development.

In trying to establish a strong electronic government component, the OMB introduced, the latest version of the government’s Internet portal. The website allows applicants to obtain forms and services from many agencies. Forms will be available in stages according to the ease with which they can be processed, according to Melba Acosta, chief of management & budget.

Meanwhile, the market for personal computers in Puerto Rico remains strong. According to the 2002 CARIBBEAN BUSINESS "Book of Lists," the island’s five largest computer and computer-related retail stores tallied a total $53.8 million in sales in 2001.

Although results from surveys vary, nearly 900,000 people of all ages are gaining frequent access to the World Wide Web from the island. A market study by Research & Research says 45% of those surveyed have a personal computer available at home. Out of those who have access from home, nine out of every 10 said they can also get on the Internet from their workplace.

Another study from TransNational TradeWays says cybershoppers from Puerto Rico spend an estimated $364 million on purchases over the Internet each year. Its study also indicates that 75% of people who go online have less than four years’ experience on the Net.

"The Internet offers local business a beautiful opportunity to compete internationally, if only local businesses were ready to sell online," study researcher Ivan Irizarry Pietri said about the market’s development.

The techno fair has become a prominent vehicle for entrepreneurial education. The City of Caguas, the Puerto Rico Small Business Development Center, and other agencies sponsored one such event which was attended by more than 1,000 people; Universidad del Turabo hosted a similar event with exhibits and workshops. E-Business Day in San Juan, now in its sixth year, served the same purpose: to teach participants how to get the most out of electronic commerce.

While some in the business sector develop its tech-based business strategies, others work to prepare the consumer for e-commerce. Puerto Rico Telephone, Microsoft Caribbean, and Cisco Systems have all supported programs aimed at facilitating Internet access at community centers, libraries, and other public spaces.

Slowly But Steadily, Telecom Firms Make Their Moves


December 26, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

With the telecommunications industry enduring a weak global market, major wireless phone carriers in Puerto Rico made cautious advances in establishing new technical standards in coverage for the island’s estimated 1.5 million users.

AT&T Wireless, Centennial, Cingular, MoviStar, Sprint PCS, and Verizon Wireless have launched or are about to launch improvements to their networks as well as new features. They range from high-speed Internet connections and Web surfing to music downloads. If a cell phone already accomplishes any of this and more, then its designers and marketers want it to happen clearer and faster.

Applications for cellphones and their handheld variations include enhanced text messaging and chat rooms, electronic games, e-mail with attachments, video and audio clips, animated ringtones and screen savers, enhanced digital imaging, and faster Internet browsing and downloads.

Local Sprint customers stood to benefit from these advances when the carrier presented the PCS Vision line in August 2002. Like most companies moving to next-generation technology, Sprint expects faster wireless data speeds and enhancements for existing applications and services when using a Vision-enabled device. It also establishes a platform for later releases of new, more advanced applications.

Also in August, AT&T Wireless arrived on the market when it replaced its affiliate, SunCom, and immediately established its mLife menu of features and services. MoviStar promoted its short-text messaging service with a tie-in to sweepstakes on local television shows.

Given the significantly richer images expected from these devices, games and digital photography will be the next big thing with consumers, according to industry observers. However, initial public reaction to new-generation services has been tepid, leading to a decline in the mobile handset market around the world, according to industry analysis firm Gartner Dataquest.

The bar in Puerto Rico was raised again in mid-December, when Liberty Cablevision expanded its voice over Internet protocol telephony service for its cable TV customers. Liberty’s joint venture with service provider Net2Phone began in June.

As the carriers compete with each other for market share, they must contend with the industry grandfather, Puerto Rico Telephone (PRT). The administrator of the landline infrastructure system that covers most of the island, PRT can charge other telecom carriers a so-called K-2 tariff. The companies pay PRT nine cents per minute for using PRT’s local loop to provide intraisland long-distance service.

In October 2001, the Telecommunications Regulatory Board ruled in favor of a gradual decrease in the fee every Nov. 15. The fee would have dropped to four cents per minute by November 2002.

However, PRT has challenged the board’s ruling in court, where it remains in the appeals process. The latest hearing was scheduled for Dec. 17 in the U.S. Court of Appeals in San Juan. PRT President & CEO Jon Slater said the case is likely to go on, though he didn’t reveal any details.

Slater did remark, however, that PRT’s basic fees to consumers have remained unchanged since 1982, despite increases in many costs related to company operations. "The company can’t absorb this without hurting itself," Slater said.

PRT made headlines in January when Verizon Communications Inc. and Banco Popular Inc. purchased stock from the central government in Telecomunicaciones de Puerto Rico (Telpri), the holding company for PRT and Verizon Wireless of Puerto Rico. Parent company Verizon raised its interest in Telpri from 40% to 52%, while the government’s ownership dropped to 28%.

The accounting scandal that drove WorldCom into bankruptcy, one of the year’s top business stories worldwide, had little noticeable effect on the company’s interests in its Puerto Rico subsidiary, long-distance carrier MCI.

They Said It in 2002

"Do we really want all that information on such a small screen?"--Carlos Bofill, CEO of Centennial de Puerto Rico, April 18

"Something like short messaging services [text on a phone’s screen] is very hot, but functionality and comfort are what count."--Jon Slater, president & CEO of Puerto Rico Telephone and Verizon Wireless, Oct. 7

This Caribbean Business article appears courtesy of Casiano Communications.
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