Market Trends of Israel Cloud Computing Industry
Rapid Digitalization and growth of Data Centers to Drive the Market
- As industries increasingly embrace digitization, Israel is witnessing a swift expansion of data centers, pivotal to the cloud computing framework. Tech giants such as Google, Amazon, and Microsoft have set up cloud regions and data centers in Israel. This strategic move allows businesses to transition to cloud solutions with enhanced efficiency and security. The established data centers not only bolster scalable and dependable cloud services but also streamline the migration process for businesses moving to the cloud.
- For instance, the Israeli Ministry of Defense avails cloud computing services from Google. Project Nimbus, a USD 1.2 billion cloud computing and AI agreement, has stirred controversy. It involves the Israeli government and tech giants Google and Amazon. As per the Israeli Ministry of Finance, Project Nimbus provides public cloud services to the government, the defense department, and the IDF.
- Furthermore, in September 2024, Salesforce, a cloud software firm, unveiled its Hyperforce cloud platform in Israel. This move ensures that sensitive data from both the government and companies remains local. After two years of development, the platform will kick off on Amazon Web Services (AWS) infrastructure, with a potential shift to Google Cloud Platform in the future, as stated by the company.
- Israel's businesses and government sectors are undergoing a digital transformation, resulting in a surge of data generation. Daily, vast amounts of data are produced, ranging from digital healthcare records to e-commerce platforms. This burgeoning data generation necessitates cloud storage and computing solutions that are both cost-effective and scalable. As organizations grapple with managing this data locally, the allure of the cloud for storing and processing large datasets becomes evident.
- Moreover, Israel showcases a robust digital engagement. For example, in 2023, SurfShark, a VPN service brand, reported that Israel scored 0.67 on the Digital Quality of Life Index. In this latest ranking, Israel secured the 17th position out of 121 countries.
Understand The Key Trends Shaping This Market
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Telecom and IT to Hold a major share
- Israel's Telecom and IT sectors are experiencing rapid growth, fueled by a heightened dependence on digital communication and sophisticated IT solutions. To support high-speed internet, 5G, and other communication services, telecom companies are demanding extensive data processing, storage, and management capabilities. This need has led to the widespread adoption of cloud computing in the telecom industry, given its flexibility and scalability in managing vast data volumes.
- The demand for cloud computing in Israel's telecom industry is being further propelled by the rollout of 5G networks. These networks, with their high-speed and low-latency data transmission, need to find optimal management through cloud platforms. By leveraging cloud infrastructure, telecom companies can adeptly manage the surge in data traffic, oversee network management, and utilize services like edge computing. This strategic move not only boosts service quality but also ensures cost efficiency.
- For instance, Bezeq, an Israeli telecommunications company, reported that prior to the onset of the Israel-Hamas war, from September 15 to October 6, 2023, Israelis averaged 15.9 gigabytes of daily internet usage. Following the war's outbreak on October 7, average download volumes surged by 35 percent in the subsequent week. While this uptick moderated by November 7, 2023, internet traffic volumes continued to outpace pre-war averages.
- In April 2024 - Pelephone unveiled its inaugural 5G MAX network package in Israel, boasting internet speeds of up to 6 GB. The establishment of the network's core came with a NIS 50 million (~USD 13.3 million) investment. The company highlighted the network's potential to aid Israel during emergencies. Subscribers to this new core can expect enhanced browsing, improved call quality, richer content access, elevated traffic rates, reduced latency, and prioritized network access during peak times.
- As data privacy regulations tighten and cybersecurity concerns escalate, Israel's IT and telecom sectors are increasingly embracing secure cloud computing. Telecom operators, in particular, are prioritizing cloud infrastructures fortified with stringent security measures to safeguard sensitive customer data. In response, Israeli cloud providers are ensuring compliance with both local and international regulations, enhancing the appeal of cloud adoption for IT and telecom firms that manage extensive volumes of personal and sensitive information.
