In a concerted effort to keep pace with its rivals and establish a presence in the Latin American market, Microsoft (Nasdaq: MSFT) has announced a joint venture agreement with Mexico’s largest telecommunications company to create a portal for Spanish-speaking consumers in Latin and North America.
The software giant, which has been struggling to establish its MSN network as a legitimate contender to AOL, Yahoo!, Lycos and other major portals, said that it will work with Telefonos de Mexico (Telmex, NYSE: TMX) to develop the portal. It will offer a full search engine in Spanish, new guarantees for credit card shopping, and local content in each country that includes news, entertainment listings and stock quotes.
The new venture will open offices in Argentina, Chile, Colombia, Central America, Mexico, the U.S. and Venezuela, the companies said. The financial terms of the deal were not disclosed.
The move also seems to indicate that Microsoft has acknowledged the increasing economic muscle of minority markets in the U.S. Current projections from the U.S. Census Bureau show that the Caucasian population in the U.S. will level off in the coming century, while the Hispanic population will grow steadily. In fact, the Hispanic population is expected to be the distant leader in minority population growth by 2025.
“What’s most relevant about this alliance is the enormous potential of local content and options Microsoft and Telmex will offer to Spanish-speaking Internet users,” said Mauricio Santillan, Microsoft vice-president for Latin America. “In addition, we acknowledge the existing differences and similarities among consumers in each market, and, as such, intend to expand this program to engage the main access and content providers from various countries throughout the continent.”
Head To Head
The deal with Telmex comes a year after MSN announced the launch of portals in 24 countries, including many in Latin America. Microsoft does not disclose details concerning usage of the sites, but it is clear that the overall MSN strategy is falling short of fulfilling the wishes of company executives.
The service’s total base is approximately two million users, according to Jupiter Communications. That figure falls far short of AOL’s 18 million members and the 32 million registered users of the Lycos network’s community of Web sites.
Ironically, as Microsoft pinpoints the Spanish-speaking market to jumpstart its service, Lycos announced the launch of 14 Spanish-speaking sites today. Two of those sites are aimed at the Spanish-speaking U.S market, while the others will offer localized content in six Latin American countries. Yahoo! (Nasdaq:NM:YHOO) launched a Mexican Web portal earlier this month.
Additionally, Spanish telecoms operator Telefonica is working feverishly to create its own main portal, having recently purchased Mexican Internet service provider Infosel.
Reaching Out Like an Octopus
As it announced this latest in a series of moves to forge ties with telecommunications companies, Microsoft was quick to point out that each alliance in that sector consists of partners equally sharing their expertise: Microsoft lends its software and computing expertise, and the telecom companies bring their expertise in video, broadband data and telephony.
Microsoft has actively courted alliances with various U.S. and international cable operators and telephone companies as part of its strategy to integrate computing and Internet use with compatible functions such as TV watching and talking on the telephone.
Microsoft says its relationships with telecom companies such as AT&T, British Telecom, Portugal Telecom, the RoadRunner cable modem service and top-five U.S. cable operator Comcast were designed to link Microsoft with companies that are serious about broadband delivery of Internet services. “We are agnostic about which particular technology will take us there — this is why we’ve supported a wide range of technologies, such as cable, telephony and wireless services,” Santillan said.
Emphasizing that Microsoft is still not interested in becoming a telecommunications company or a cable operator, Santillan said the company’s goal is to drive the market for software and services that take advantage of high-speed connections. “We want to help consumers move from the slow, narrow-band, PC-centric world of today to a fast, exciting broadband world where consumers will have access to information anytime, anywhere and on any device. We believe this broadband future is the key to delivering a better consumer experience and growing our industry.”
Telmex, Mexico largest telecommunications company, has more than 10.5 million phone lines and 4.1 million wireless customers. Despite the country’s aging telecommunications infrastructure, Telmex uses a 33,000 kilometer fiber-optic network in three Central American countries.