Pushing silicon: Metron romps in Brazil's consumer computer market, but that's not nearly enough. (Technology).

Metron, Brazil's personal-computing powerhouse, is branching out from the consumer market it rules and looking for growth on the bigger playing field of corporate computing-and any edge it can get in foreign markets.

It has to Metron leads the domestic market in branded personal computers for the home-beating out global names like region-wide No. 1 Hewlett-Packard (whose numbers include sales by its recent merger partner, Compaq), as well as Brazil's homegrown competitor, Itautec. But 75% of Brazil personal computer market stubbornly belongs to unbranded "white box" machines.

Assembled from smuggled parts and pirated software, the flood of unbeatably cheap clone PCs made in Brazil's backroom workshops has driven larger rivals away from the consumer market. "Compaq stopped being Metron's biggest foreign retail-sector competitor in 2002, when it greatly scaled back sales to retailsector clients, because it complained it was losing money on the retail market," says Albert Mar, the commercial director of retailer Ponto Frio.

Metron sold US$150 million worth of computers and equipment in 2002,85% of which were personal computers. The company has added laptops and handheld computers to its product line, and its sales force is branching out to supply computer-driven machinery like automatic bank tellers and kiosks that sell airline, bus and movie tickets. A push toward business clients began in 2001; customers such as the city of Sao Paulo's health department now represent 25% of sales.

Metron executives say efficiency drives price. Begun in 1984 as a taxi-meter manufacturer, Metron has just two levels under CEO Leone Picciotto and only 300 salaried employees, most of whom assemble computers. Metron cuts costs purchasing parts just in time; by paying commissions rather than salaries to salespeople; and by outsourcing its sales promoters, who push the product in retail chains. "Our success is based on cutting operational costs to the bone," says Metron retail sales director Paulo Bucaresky. "A branded computer company can't get much more streamlined than we are."

Since September 2002, Metron has sold 2,000 PCs a month in Portugal, building on a relationship with Portuguese group Sonae's Brazilian hypermarkets, appliance and computer stores, In 2003, Metron plans to sell its PCs in France (it's negotiating with the supermarket chain Casino), Spain and the United States (where it's negotiating with Wal-Mart, already a client in Brazil). Metron projects that exports will account for 20% of sales by 2005.

Outward bound. "Metron hopes to gain market share in Europe because it's got a pulverized PC market with no market leader," says Bucaresky. "Metron wants to sell to the U.S. simply because it's the biggest computer market in the world:' A dragging domestic economy, and the accompanying slow growth in computer sales, is pushing Metron to export, too; PC shipments to Brazil declined 5.3% in 2002, to 3.1 million units, according to research company Gartner Dataquest.

Metron faces an uphill battle against rivals like Dell and IBM with a wide range of services and hardware. Looking for traction, the company in November began offering the cheaper, open-source operating system Linux over Microsoft's Windows, reducing its price by $120.

Don't count super-efficient Metron out, say retailers who know the company well. "A main Metron edge is its ability to react more quickly than its foreign competitors-whether it is reacting to a competitor's price cut or to fluctuations in consumer demand' says Roberto Fulcherberguer, head of computer purchasing for Brazilian retailer Pao de Acucar.

If Fulcherberguer is right, the former Brazilian taxi-meter company might have a great second act, this time on the road.

[GRAPH OMITTED]

Personal computer shipments market share in Brazil


Metron           6%
Itautec          5%
Hewlett Packard  5%
Others           84%

SOURCE: Gartner Dataquest and Gartner reports only the top three vendors
in Brazil.

Note: Table made from pie chart