Q-1: Mr. Martinangeli, last year you compared NEC Argentina with a Ferrari driving in the second gear, and in the year 2001 it would change to the sixth gear. Did that prediction become true and, to continue with your comparison, since when did the Ferrari start to drive in Argentina and since when are you the pilot?
A-1: Taking into account these four first months of the year, I would say that we are in the third gear. I am saying that because the stock of the country was very poor during summer time. It was a tough period for us because we could not carry out the projects that we developed. The headquarters gave us orders that we could not implement. There were also some companies that decided not to invest for the first four months of the year. We are hopefully waiting to receive those investments now.
I started to work at NEC Argentina in October 1999. I came from UNISYS Brazil. I lived in San Pablo for one year. I was running the Sales Direction for Communications at UNISYS. NEC started to operate in Argentina in 1978. At that moment, we developed applications for the private market: monitors, displays, etc. In the eighties, we created a factory of switching products for offices and also for the Telephone Company that at that time was Entel. During the nineties and taking into account the privatization period, NEC passed trough a very good time with the switching production. After 1995, the margins started to be lower and NEC decided to change. The corporation was divided into three companies: A, B and C. The first one took care of the solution, computer and system integration businesses. The second one, which is NEC networks, was focused on the hardware equipment and some solutions for the telecommunication market. The third one, NEC electron devices, worked on the semi conductors.
Q-2: One month ago the president of the NEC Corporation, Mr. Hajime Sasaki, visited Buenos Aires to inaugurate officially the new NEC software development center. Does this mean a retreat from the hardware business, and why did NEC, although it is present in several other Latin-American countries, choose Argentina for this long-term investment and not Brazil, for instance?
A-2: We introduced the concept of software factory because we realized that we had fifty excellent engineers that were developing different software applications. Right now, they are developing projects for the corporate market also. That means solutions like PID (Personal Identification Device), Internet, etc. We decided to change the image of the company. We also asked Japan for some money in order to invest in the software business. The chairman of the corporation came here in January and met President De la Rúa at our technological development center in Florida, Buenos Aires. He announced to him an investment of 100 million dollars for the next three to five years. We have not abandoned the hardware business.
It took me a year to convince Japan to invest in Argentina. Basically, they took in consideration the capability of our engineers. The capabilities of the Brazilian engineers are very different. Our engineers can make many innovations for the market. Motorola, Intel and Microsoft are looking for these kinds of professionals too. So, we felt without any doubts that the Argentinean software engineers are very good. Unfortunately, we have lost a couple of our engineers that decided to work for Microsoft and moved to Seattle. We have that type of professionals. Brazil is also in the middle of the privatization period. The digitalization of the country is recent too. NEC Brazil will have to do what we have done if they do not want to loose margins. Today they are selling a lot of office and switching products because the digitalization business is very big in Brazil.
Q-3: What is the main purpose of the 100 million dollar investment? The development of software for Web applications?
A-3: We do not have Web applications. We have applications that are working in some explorers. Basically, we have seven families of products. The first one is the television of region. The second one is the management system that controls the radio networks that are placed in central office networks, alarm networks or elevator networks. We are developing the software and the hardware that is needed to take the information and translate it to the software. We are running this application throughout any kind of explorer: Netscape and the Microsoft explorers. The third one is the PID (Personal Identification Device) that is the system that we have in the National Congress. We are also developing this system for companies. We have call centres and computer telephone interfaces. NEC is also working on the developing of new software for our banking products. We will have a multiservice machine that would provide direct access to Internet.
Q-5: What is NEC Argentina main consumer market, besides the domestic market?
A-5: We exported to Egypt, Taiwan, and Singapore. In the near future, I would like to focus on Latin America. Basically, the corporation is going to see Latin America through Argentina, Colombia and Brazil. Argentina will have the responsibility for the development of our products in Uruguay, Paraguay, Bolivia, Chile and Peru. We have a lot of competition in Chile. Telecom Italy and Telefonica are working in Chile and Peru. So NEC is going to work harder in order to compete with better solutions.
Q-6: Telecommunications is one of the most promising investment sectors in Latin America, and in particular in Argentina. What do you foresee for the future of Telecommunication and IT in Argentina?
A-6: I think that the future of these technologies is going to be fantastic in Argentina. The secretary of Communications is thinking about organizing a public bid for UMTS-licenses in October. They have to work harder with the frequencies because today some of them are limited for the technical solutions. The Government is going to move that band. They want to open the market in order to bring the best technical solutions to the country. Argentina also needs the investment and the commitment of good companies.
| A-6: I think that the future of these technologies is going to be fantastic in Argentina. The secretary of Communications is thinking about organizing a public bid for UMTS-licenses in October. They have to work harder with the frequencies because today some of them are limited for the technical solutions. The Government is going to move that band. They want to open the market in order to bring the best technical solutions to the country. Argentina also needs the investment and the commitment of good companies.
Q-7: What do you think about the support of the Government for the development of the new economy or the IT industry in Argentina?
A-7: I am satisfied with it. We are working with the Government in order to look for new investments and to open the markets. We want to develop the technologies that the people need in Argentina. The Government is going in the right direction but they have to do lots of things. Basically, they have to work for the development of the IT market. The communication sector is working very well.
Q-8: What do you expect from the wireless web access through cellular phone technology in Argentina? Considering that in the US only 6% use this way of going online, compared to 72% of the cell phone users in Japan, does this technology have a future in Argentina?
A-8: The United States is very unusual in some things. In the United States, the average invoices of the cellular phone market were thirty dollars per person during the eighties. When this service started in Argentina the average climbed to 120 dollars. I think that this technology is going to be a complementary tool. Basically, the people would use it to check e-mails and to look for information about the stock market.
Q-9: Who will be your main target in this segment?
A-9: Basically, the public sector and the corporate market. In Japan, these products are developed for the general public. Young people are using Internet while they are traveling by subway. We are not going to see this type of phenomenon here.
Q-10: Is NEC Argentina going to develop all these technologies in the near future?
A-10: Yes, sure. We do not have any doubts. If the Government organizes this public bid for October, we will implement these solutions in the short term. We will have to translate all the applications from the Japanese to the Spanish. If we do not do so, it is going to be very difficult for the Argentinean market to understand it.
Q-11: Last years turnover reached approximately 70 million dollars. What are your expectations for the financial results of this year?
A-11: We are expecting to finish this year with a turnover of 110 million dollars. We also think that our average growth would be around the 11 to 14% in the next two or three years. But I am sure that we can do more than that. We are not going to hire more employees, with the exception of software engineers, but we are probably going to improve the profile of our people. We are introducing some career plans. NEC Argentina wants to increase the number of the employees that are working in the software development division. We have 71 and we are expecting to have 250 in the next two years.
Q-12: Do you encourage your employees to visit training programs not only in Argentina but as well in Japan?
A-12: Yes. We are giving work opportunities to some students. They have the chance to work in our plant before they get the degree. We are also doing some interchange program with NEC headquarters in Japan. They receive our employees for one or two years and they come back to Argentina with more knowledge and capabilities. We have many things to do.
Q-13: As you know, our readers are mainly top executives and businessmen. What is your final message to them?
A-13: I would invite them to come to Argentina and to invest money here. We have the best software engineers of the world. The public sector market is also virgin. If we do not do anything, our country is going to be very poor from the technical point of view. Without any doubt, we have to change that. We need good equipments, communications and companies. They do not have to think about investing money and going out. They will have to stay in the country for many years as NEC did.
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