Wednesday, May 20, 2009

The “People's Cellphone” | 15 May 2009

Hugo Chavez and his nationalized CANTV are ecstatic about the immediate sellout of the new $15 phone with camera, MP3, and much more. It is “light, beautiful, good and cheap.” With a serious inflation problem hurting Chavez's base among the poor, the cheap cellphone is a welcome symbol of a success for the Bolivarian Revolution. Hugo has teamed with China's ZTE for a dramatic symbol of what Venezuela can do after pushing out Verizon.

“This telephone will be the biggest seller not only in Venezuela but the world. Whoever doesn't have a Vergatario is nothing. ... It is science and technology at the service of the people not the elites ... the day will arrive when we manufacture phones for Cuba and Latin America.” (Google translation)

Two years ago Chavez pushed Verizon and the Mexicans out of CANTV, creating an international incident. U.S. folks swore the Venezuelans couldn't run a phone company, so it became a point of pride for Chavez to do well. Profits at CANTV and Mo are up, prices down, market share increasing, and Venezuela is one of the few countries in the world with major growth in landlines. History will tell us whether that's a side effect of the oil boom, smart policy, good management or a mirage. Authoritarian states can do well – China, Malaysia, Singapore – so the question of government form and economic growth is unanswered.

I've no direct data, but $15 is so low I suspect there is some subsidy along the way. 

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