Amazon (NASDAQ:AMZN) is actively reinforcing its position in the Asia-Pacific (“APAC”) cloud computing landscape, as evidenced by the latest investment initiatives by Amazon Web Services (“AWS”) in Japan. The company aims to inject 2.26 trillion yen ($15.24 billion) into Japan by 2027, with a strategic focus on expanding its cloud infrastructure, particularly in Tokyo and Osaka.
This significant investment is expected to position AWS to effectively meet the increasing demand for artificial intelligence services in Japan. In addition to this commitment, AWS’s ongoing financial support includes a total expenditure of 1.51 trillion yen in Japan from 2011 to 2022.
The expanding investments in Japan are poised to strengthen AWS’s presence in the thriving public cloud market of the country. According to a Statista report, this market is projected to generate $21.44 billion in revenues by 2024, with an anticipated surge to $34.1 billion by 2028, reflecting a compound annual growth rate (CAGR) of 12.3% between 2024 and 2028.
Prospects for Growth in APAC
Beyond the recent developments in Japan, AWS is planning to establish an infrastructure region in Malaysia, with an investment target of approximately $6 billion by 2037, contributing to job creation in the country. The inauguration of the second infrastructure region in Melbourne, Australia, in the AWS Asia Pacific (Melbourne) region last year is another positive step, involving an investment of around $4.5 billion by 2037, supporting 2,500 full-time jobs annually.
Furthermore, the introduction of an infrastructure region in Tel Aviv, Israel, under the name AWS Israel (Tel Aviv) Region, is a noteworthy advancement. AWS also has plans to create a region in Bangkok, Thailand, and set up an infrastructure region in Auckland, New Zealand, consisting of three availability zones.
These endeavors are expected to empower Amazon, currently holding a Zacks Rank #2 (Buy), to capitalize on the burgeoning growth opportunities in the APAC region. The APAC cloud market, identified as an emerging market for cloud technology, is anticipated to witness a CAGR of 15.1% between 2023 and 2030, according to a Research and Markets report.
The Momentum of Cloud Services in APAC
Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS) are gaining momentum in APAC, with several companies having migrated or in the process of migrating their workloads to the cloud. Firms are keenly focused on developing digital transformation solutions via the cloud to meet the growing demands of their customers.
Competitive Landscape
Given the thriving landscape in APAC, Amazon faces competition not only from its peers, such as Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Alibaba (NYSE:BABA) but also from their concerted efforts to expand in the region. Microsoft’s Azure is preparing for the launch of five data centers in various APAC locations, while Alphabet’s Google has already established a data center in Japan in 2023, marking its third in Asia. Google’s continued expansion into regions like India, Australia, Qatar, and Saudi Arabia further underlines the intensifying competition.
Alibaba is also making substantial investments to extend its footprint in the APAC cloud market, with the noteworthy launch of Alibaba Cloud’s third data center in Indonesia.
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