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Amazon Web Services (AWS) is eyeing a prominent role in Japan's AI and cloud strategy, and is willing to spend a huge chunk of change to secure it.
January 22, 2024
The hyperscaler has announced plans to invest 2.26 trillion yen ($15.3 billion) between now and 2027 to beef up its cloud infrastructure in Osaka, which it says will accelerate the development and adoption of AI and machine learning, and support enterprises' digital transformation (DX) strategies.
AWS already has a sizeable presence in Japan.
It flicked the switch on its first cloud region, in Tokyo, in 2011. It followed that up in 2011 with the launch of another one in Osaka. Respectively the two regions boast four and three data centres – or 'availability zones', as AWS calls them.
AWS says it has invested JPY1.51 trillion in its Japanese business between 2011 and 2021, and that the additional spending in Osaka will take its total investment to JPY3.77 trillion by 2027.
"AWS is committed to helping Japanese customers access secure and scalable cloud infrastructure to accelerate their digital transformation (DX) and sustain business growth in today's complex economic environment," said Tadao Nagasaki, president of AWS Japan.
AWS even prepared an economic impact estimate to accompany its announcement.
It says its investments to date have already chipped in JPY1.46 trillion to Japan's GDP and supported more than 7,100 jobs. It reckons its new investment plan will contribute an additional JPY5.57 trillion to GDP, and will support as many as 30,500 jobs.
"Our investment will accelerate the DX of even more customers in the public and private sectors, and will enable AI (artificial intelligence) and machine learning," said Nagasaki.
According to IDC, cloud-based spending by what it calls 'digital-native businesses' (DNBs) – companies that rely on some form of digital tech for value creation – in Asia-Pacific including Japan (APJ) is expected to grow by 20 percent this year to reach $26.5 billion. It expects cloud adoption in the region to increase by 35%. The analyst firm identifies AWS, Alibaba and Microsoft as AJP's top three cloud providers.
The growth is expected to be fuelled by demand for generative AI (genAI) and cloud platforms in an effort to remain competitive, create innovative products and drive efficiency.
Furthermore, IDC says 26% of digital-native businesses in APJ are already investing in genAI, while 44% are in an exploratory phase. By 2028, 80% of CIOs across the region are expected to harness AI in some way, shape or form, IDC said.
Of course, it isn't just the private sector that is keen on AI.
"In order to strengthen Japan's industrial competitiveness, it is essential to develop and secure a digital industrial infrastructure domestically. In particular, data centres," said Takuya Hirai, head of the Liberal Democratic Party's Digital Society Promotion Headquarters.
"We very much welcome long-term investments in important and strategic areas for Japan, such as data centres, digital talent development, AI and renewable energy," he continued. "We hope that Amazon Web Services will continue to play an even bigger role in strengthening Japan's digital industrial base."
The Japanese government in 2022 published an AI strategy with five objectives. It wants to attract and develop an AI talent pool; promote AI adoption by multiple verticals; create technological systems that support AI deployments; contribute to international research; and solve imminent crises pertaining to the climate and global pandemics.
On the face of it, it looks as if AWS' cloud investment plan could make a valuable contribution to more than one of those objectives.
Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.
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