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US software firm Ipswitch expects its Latin American business to expand next year mainly due to the launch of new versions of its software products. The firm also sees growth opportunities in the region when considering some countries' stable economic scenarios.
To find out more about the firm's regional strategy, BNamericas spoke to Alessandro Porro, international sales VP for the company's network management division.
BNamericas: How has the year been for Ipswitch's Latin American operation? Are you on track to meet the previously set growth goals?
Porro: Our expected growth for 2011 versus the previous year was 32%. By the end of October we'd grown 29% compared to the same period last year. We're still slightly behind our growth target but think that we'll be able to reach the expected growth level by the end of the year. November and December are always strong months for us, with large projects. We're expecting to close some projects that have been delayed.
BNamericas: In which markets have you experienced the highest growth so far this year?
Porro: We're experiencing very significant growth in our Brazilian operation. Other key operations for us that are also seeing attractive growth rates are Mexico, Argentina and Chile. The growth rate for 2011 is very similar in these four markets. However, in the rest of the region, we're also recording [good] growth levels in Peru and Colombia. We believe that during 2012, the growth rates for these two countries will accelerate and could even grow faster than the other markets.
BNamericas: How important are Ipswitch's Mexican and Brazilian businesses in terms of revenue contribution?
Porro: These two countries are our largest markets and they currently account for approximately 55% of Ipswitch's network management division revenues in Latin America. Other significant contributors are Argentina and Chile.
BNamericas: Latin America is becoming one of the fastest growing regions for IT firms. However, revenue contribution from the region is still small. Is this the case for Ipswitch?
Porro: The Latin American region currently represents high-potential market for us. We see a lot of growth opportunities in this region. For example, the economic prosperity of Brazil is a clear indicator that the technology adoption in this market will accelerate over the next years. This expansion may also occur in other markets across the region. However, Latin America currently accounts for approximately 3.5% of the company's network management division revenues.
BNamericas: Are you expecting this contribution to remain stable in the short and medium term, or do you think that the region could contribute more?
Porro: We're estimating that the region could account for 4% or 5% of total revenues within the next three years.
BNamericas: Have you already set the expected growth target for the coming year?
Porro: For next year, we're expecting to expand our business in Latin America by 25-30% compared to 2011. We're expecting our regional growth in 2012 to be based mainly on the launch of new versions of our products.
We're looking to launch a new version of our core product, which is WhatsUp Gold. We've been working on the new architecture for this solution for a while. The new version of WhatsUp Gold will offer a larger scale. The existing version of the solution is attractive for medium-size firms and also for the enterprise segment. However, the new version will be even more attractive for large firms.
Apart from the new version of WhatsUp Gold, we're also expecting to launch a new product for applications monitoring. We will also launch new versions of other products currently in our portfolio. This is why we believe that 80% of our growth next year will be based on new product launches.
BNamericas: Ipswitch currently sells its product through a network of wholesale distributors. Are you expecting this sales structure to remain unchanged for the coming years?
Porro: We have an alliance with Network1 for the Brazilian market and with Licencias On Line (LOL) for a large number of countries across the region. We think that we're well covered with these partners. However, we're always working to make our alliances more efficient with these firms. We always try to make sure that the technical and sales teams are well trained, and we also supervise the recruitment of new channels. We really want to be involved in recruiting specialized partners because we want to have more proximity with them.
BNamericas: Last year, when we asked you about the possibility of opening any field office across the region, you said it was not in the company's plan in the short term. Has this scenario remained unchanged, or are you now thinking of this possibility?
Porro: The situation remains the same - we aren't thinking of opening a field office in Latin America. We still see our business structure in Latin American as good for us in terms of profitability. However, eventually we may decide to open an office here in the future, possibly in 2013, but not next year.
Our strategy for the region is to invest in increasing our staff in the Latin American markets. We're still identifying the better option – to open an office or have people under a telecommuting scheme.
BNamericas: How do you see the adoption of Ipswitch solutions in Latin America? Is there any difference in the adoption pattern here compared to other emerging regions across the globe?
Porro: I believe that the region is starting to see accelerated adoption of the solutions we offer, in line with other emerging markets. In a couple of years, the acceleration in adoption will be even [across the regions].
About the company
Headquartered in Lexington, Massachusetts, Ipswitch sells its products through distributors, resellers and OEMs in the US, Canada, Latin America, Europe and the Pacific Rim.
The company has a network management unit, which accounts for 90% of its revenues. Ipswitch also has a file transfer division, as well as a messaging division.