Market Trends of Japan Cloud Computing Industry
Major Advancements in Digital Change Nationwide
- Cloud computing fostered innovation by providing access to advanced technologies, such as artificial intelligence (AI), machine learning (ML), and big data analytics. Organizations experimented and innovated without significant upfront investments. For example, in August 2023, a survey by Japan's Ministry of Internal Affairs and Communications revealed that nearly 69% of Japanese companies utilized cloud services primarily for file storage and data sharing. In addition, the survey indicated that over half of these companies leveraged cloud services for internal information sharing and email communications.
- In addition, in March 2024, Digital Realty, a provider of cloud and carrier-neutral data centers, announced the initiation of construction on its third data center on the NRT campus in Inzai, Chiba Prefecture, Japan. Dubbed NRT14, this center was a pivotal addition to Digital Realty's global data center platform, PlatformDIGITAL®, which was planned to open in December 2025. Its launch aimed to significantly bolster the availability of advanced, AI-ready infrastructure in Japan.
- Moreover, retailers leveraged AI for enhanced customer insights, supply chain optimization, and dynamic pricing strategies. E-commerce platforms use AI to provide personalized shopping experiences and improve customer retention.
- Furthermore, as organizations digitized their operations, ensuring data security and regulatory compliance became a priority. Many cloud providers offer robust security measures and compliance with regulations, making them attractive to organizations handling sensitive data. For example, in March 2024, Cisco Systems, Mitsui Information, and KDDI Engineering announced a collaboration to roll out a private 5G network tailored for smart factories. The trio planned to establish an "Industry 4.0 Testbed" at the Shinwa Komaki SFiC Lab in Komaki City, Aichi Prefecture, Japan. This initiative aimed to provide manufacturers with a platform to test and validate various industrial applications leveraging private 5G technology. Envisioned applications spanned from automated guided vehicles (AGVs) to industrial robots, machine vision systems, and other facets of advanced factory automation.
- In addition, cloud computing enhanced digital transformation by evolving it from merely adopting new technology to a comprehensive restructuring of processes, tools, and experiences in a remote, virtual environment. Cloud solutions improve security, enhance user experience, and protect data integrity. Consequently, businesses increasingly incorporated cloud technologies into their operations, driving the growth of the cloud computing market.
- Furthermore, cloud computing emerged as a transformative force for businesses aiming to develop supply chain management (SCM) swiftly and effectively. For instance, in March 2024, Oracle unveiled Oracle Smart Operations, introducing enhanced supply chain execution features in its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite. Leveraging technologies such as artificial intelligence (AI), these new features in Oracle Fusion Cloud Manufacturing and Oracle Fusion Cloud Maintenance empowered customers to boost factory output through increased productivity, improved quality, reduced unplanned downtime, and enhanced operational visibility.
- In parallel, numerous banking and fintech entities steadily transitioned to cloud technology since its inception. The financial sector experienced rapid growth in data creation and utilization. This transition enhanced transparency and gave consumers greater control over auditing processes and data management. In addition, it offered a more flexible method for data classification.
Understand The Key Trends Shaping This Market
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Telecom is Expected to Grow at a Significant Rate
- The rollout of 5G networks in Japan is driving a surge in demand for cloud-based solutions. 5G networks require significant computational resources to handle the increased data traffic and support new applications. For instance, as of March 2024, Japan recorded nearly 92.4 million 5G subscriptions, as the Ministry of Internal Affairs and Communications reported. The surge in 5G adoption drives the nation's demand for cloud computing services, fueled by the scalability and flexibility that cloud computing offers.
- Cloud-based tools can help telecommunications companies optimize their network infrastructure, improve performance, and reduce costs. By leveraging cloud technologies, telecom operators can automate network management tasks, analyze network data, and identify potential issues more efficiently.
- Cloud computing enables telecommunications companies to deliver enhanced customer experiences. For example, cloud-based platforms can be used to personalize services, offer real-time customer support, and analyze customer behavior to identify trends and preferences. For instance, in June 2024, Japanese companies KDDI and Sharp teamed up with Super Micro Computer Inc. and Datasection to establish an AI data center. The facility, set to be operational soon, boasts Nvidia's GB200 NVL72s server racks, specifically designed for training and executing AI models. With a capacity to accommodate at least 1,000 servers, the data center is poised to play a pivotal role in the AI landscape.
- The growing adoption of IoT devices and the rise of edge computing are creating new opportunities for telecommunications companies to leverage cloud-based solutions. For instance, In August 2023, a survey conducted by Internet Initiative Japan found that 18.5% of Japanese manufacturing firms were adopting the Internet of Things (IoT) to create smart factories. Including those already using IoT or considering its adoption, the figure climbed to 37.9%. Given that cloud platforms can manage IoT devices, process data at the edge, and offer cloud-based services to IoT applications, demand for these platforms is expected to rise.
- As the telecommunications industry becomes increasingly competitive, companies are looking for ways to differentiate themselves and improve their bottom line. Cloud computing can help telecom operators achieve these goals by enabling them to offer innovative services, reduce costs, and improve operational efficiency.
