Bloomberg News

America Movil Seeks to Boost Profit on Mozilla Smartphone

February 25, 2013

Mozilla Chief Executive Officer Gary Kovacs

Mozilla Chief Executive Officer Gary Kovacs said Latin America is “the highest growing Internet society in the world.” Photographer: Simon Dawson/Bloomberg

America Movil SAB (AMXL), the wireless carrier controlled by billionaire Carlos Slim, predicts a new smartphone running Mozilla Corp.’s Firefox operating system will help boost revenue and profit.

“The opportunities for growth are huge” as only 15 percent of the 261.6 million wireless customers of Mexico City- based America Movil use smartphones, Chief Marketing Officer Marco Quatorze said in an interview in Barcelona yesterday. The highest adoption rates will come from Peru and Central America, he said.

In addition to America Movil, more than a dozen wireless carriers including Telefonica SA (TEF), Deutsche Telekom AG (DTE) and Sprint Nextel Corp. (S:US) are supporting an open mobile operating system by Mozilla to make a range of cheaper smartphones to counter Google Inc. (GOOG:US)’s dominance in the market with Android. Firefox-based devices may arrive as early as the second quarter, said Mozilla Chief Technology Officer Brendan Eich.

LG Electronics Inc. (066570) and Huawei Technologies Co. will introduce smartphones running on software developed by the maker of the Firefox browser, Eich said. ZTE Corp. (763) and TCL Communication Technology Holdings Ltd. (2618)’s Alcatel One Touch brand are also planning to introduce phones, according to executives at an event on the eve of the Mobile World Congress.

America Movil fell 2.3 percent to 13.63 pesos at the close in Mexico City.

‘Higher Control’

The new smartphones will cost about $100, a price that “should decline in the future, which will make the device affordable for more people,” Quatorze said. Still, it will take more two years for all its customers to have one, he said. America Movil has more mobile-phone subscribers than any other carrier in the western Hemisphere.

“Operators will benefit from a higher control of the mobile ecosystem,” Franco Bernabe (BNBC), CEO of Telecom Italia SpA (TIT), one of the carriers that have agreed to carry the devices, said yesterday in Barcelona.

The first Firefox OS devices will be available in Brazil, Colombia, Hungary, Mexico, Montenegro, Poland, Serbia, Spain and Venezuela. For the U.S., “we’ve been talking to all the operators,” Eich said.

Carriers in the alliance are trying to reduce their dependence on Android, which dominates the smartphone market with about 70 percent of shipments. Deutsche Telekom plans to introduce the operating system in Poland this summer before expanding distribution to other eastern European markets, Chief Executive Officer Rene Obermann said yesterday.

Project Delays

“It’s going to be important, but of course it’s going to take some time before it’s widely spread and before it’s really relevant,” Obermann said in an interview. “We need to go through this initial period and keep promoting it. Then it can make a difference.”

Telefonica, Spain’s biggest phone company and America Movil’s biggest competitor in Latin America, expects to sell Firefox phones in all 24 markets where it operates by 2014, Telefonica CEO Cesar Alierta said in Barcelona.

“Smartphone penetration will grow a lot in Latin America, more than three times, to reach one-third of the region’s population by 2016,’ Alierta said. ‘‘It will be the fastest- growing region in the world in coming years.”

The deadline for the project has already slipped at least twice. Telefonica, which was first to announce a partnership with Mozilla at the same conference a year ago, had initially planned to offer the first devices in Brazil at the end of 2012. In July, it said that the first handsets built by ZTE and TCL would be offered from early 2013.

Market Gains

Latin America is “the highest growing Internet society in the world,” Mozilla Chief Executive Officer Gary Kovacs said in an interview. “Telefonica and America Movil are very important.”

Market gains will probably come from Android and more basic-feature phones, Eich said. Devices will also be available from Hutchison Whampoa Ltd. (13), KDDI Corp. (9433), VimpelCom Ltd. (VIP:US) and other wireless operators, he said.

“By the end of 2013, we’ll be on the map,” Eich said. “In 2014 we’ll be growing. We are just going as fast as we can to gain share.”

The Firefox smartphones will have access to Mozilla’s mobile application store later this year. Developers will be able to create apps using a common Web-programming language called HTML5, letting them save time and money, Eich said.

Many developers and consumers are already familiar with Firefox, a desktop Internet browser that has a 20 percent market share behind Microsoft Corp.’s Internet Explorer, according to Net Applications.

“They have a lot of familiarity, they are a known entity,” Will Stofega, program director at IDC, said in an interview.

To contact the reporters on this story: Manuel Baigorri in Barcelona at mbaigorri@bloomberg.net; Olga Kharif in Portland at okharif@bloomberg.net; Cornelius Rahn in Barcelona at crahn2@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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