iTunes' Mexico entry to shake up digital market

An expected surge in smartphone sales could bode well for the iTunes music store's belated entry into Latin America. And that, industry observers hope, could help jump-start the region's digital music market.

Apple's August 4 launch of the iTunes music store in Mexico, its first in Latin America, comes about a year after the dominant mobile carrier America Movil began offering the iPhone in Mexico. On July 31, the carrier rolled out the new iPhone 3GS in Mexico, Guatemala, El Salvador, the Dominican Republic, Colombia and Uruguay. The iPhone is also available in Brazil, Chile and Argentina.

Pyramid Research projects that Latin America's smartphone market will surge to 30 per cent of all regional handset sales in 2014 from just three per cent in 2008, spurred by carriers looking to increase data revenue from customers.

Apple's share of overall smartphone sales in the region should reach 15 per cent in 2009, fuelled by iPhone sales that should top one million this year, according to Pyramid. Most of those sales will come not from the iPhone 3GS but the older 3G model, which America Movil was subsidising for free in Mexico with a two-year contract. Apple does not release sales figures, but Pyramid senior analyst Omar Salvador says Mexico likely accounts for the largest share of iPhone sales in the region to date, because of its tendency to adopt US trends and the device's availability. Salvador calls iTunes' Mexico music store "another step to reinforce the attractiveness of the iPhone in Mexico".

Mobile phone sales accounted for more than 80 per cent of digital music revenue in Latin America in 2008.

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