The cloud computing market in the Asia Pacific (APAC) region is growing rapidly. According to a report by MarketsandMarkets, the APAC cloud computing market is expected to reach $53.3 billion by 2021, growing at a compound annual growth rate (CAGR) of 22.3%.
The growth of the cloud computing market in the APAC region is driven by the increasing demand for cloud-based services from businesses and government organizations. The region is home to some of the world’s largest economies, such as China, India, and Japan, which are driving the growth of the cloud computing market.
The APAC region is also home to some of the world’s leading cloud service providers, such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform. These providers are offering a wide range of cloud-based services, such as Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS).
The APAC region is also witnessing the emergence of new cloud service providers, such as Alibaba Cloud, Tencent Cloud, and Oracle Cloud. These providers are offering a wide range of cloud-based services, such as IaaS, PaaS, and SaaS.
The APAC region is also witnessing the emergence of new cloud-based applications, such as artificial intelligence (AI), machine learning (ML), and Internet of Things (IoT). These applications are driving the growth of the cloud computing market in the APAC region.
Overall, the cloud computing market in the APAC region is growing rapidly and is expected to continue to grow in the coming years. The region is home to some of the world’s leading cloud service providers, and is witnessing the emergence of new cloud-based applications. This is driving the growth of the cloud computing market in the APAC region.
The APAC region encompasses extremely heterogeneous local economies with different trends in economic, technological, and demographical terms. Alongside developed economies such as Japan, Australia, and Singapore, the APAC region includes huge economies such as India and Indonesia, along with significantly smaller markets that nevertheless have huge potential for development.
Despite the diversity of the markets and development levels of the individual APAC economies, we can outline some common traits.
First off, the impact of the Covid-19 pandemic required a reshaping of economic activity in all markets in the region. Companies that were able to take advantage of the boost of digital technologies and opportunities for business growth stood out.
Another key factor in understanding the cloud market is the rise of the so-called Fourth Industrial Revolution.
4IR technologies, such as IoT (the Internet of Things), artificial intelligence, machine learning, robotics, 3-D printing, etc., can showcase all their potential only if paired with the capability for processing and delivering huge amounts of data — and cloud technologies provide the perfect infrastructure for long-term economic development.
Companies that have adopted cloud technologies managed to quickly respond to emergency restrictions imposed by local authorities, enabling them to control costs and/or scale resources at will.
This also provides great opportunities for SMEs and startups because cloud technologies bring within the reach of small businesses the features and capabilities that were once the preserve of large companies. Business owners of all sizes and entrepreneurs in all industries can rely on state-of-the-art data centers staffed by experienced and highly skilled engineers capable of handling cutting-edge technologies, but without incurring the cost.
Another factor to consider to better understand the state of the cloud market in the APAC region is the demographic structure of the population. According to the World Economic Forum:
Emerging ASEAN is young and increasingly urbanized. In 2030, the median age in the Philippines will be 29 while Indonesia’s will be 32. Young consumers are tech-savvy, likely to discover products on social media, comfortable spending online, and concerned about health and sustainability.
Compared with the median age registered in the EU in 2021 (44.1 years), these figures should give us a sense of how different the two macro-regions are in terms of expected economic growth and social development.
The same WEF study predicts that by 2030, “ASEAN will contribute 140 million new consumers, representing 16% of the world’s new consumer class”.
What emerges from this data is that the economies of the APAC region offer great business opportunities for those companies that will be able to adapt to the technological, economic, demographic, and regulatory constraints and dynamics.
Having a flexible and scalable infrastructure and responding quickly and effectively to the demands emerging from dynamic and technologically advanced markets will be key factors for a successful business.
For these companies, adopting cloud solutions is no longer an option to succeed, but a requirement.
With this in mind, here is what we are going to cover in this article:
Cloud Computing Adoption in the APAC Region
According to a 2019 Boston Consulting Group study of 6 key markets in the APAC region, public cloud adoption in the Asia-Pacific region continues to outpace the growth rate registered in North America and Europe.
The six economies covered by the study — Australia, India, Indonesia, Japan, Singapore, and South Korea — reported several key benefits from the adoption of cloud computing technologies:
1. Higher term productivity
From an IT perspective, the cloud creates a standardized environment, scalable back-end systems and functions, and provides access to proven tools that IT teams can use to develop systems. Thanks to the IT efficiencies that result, the core business can perform all matters of tasks — sargeting customers, developing content, and taking new products to market, for example — et a faster rate and reduced cost. Better collaboration tools such as G Suite, Slack, and Skype create administrative and communication efficiencies, while advanced applications such as artificial intelligence or machine learning enable faster, clearer insights that enhance the overall productivity of the organization.
2. Faster time to market
The public cloud allows users to take new products and services to market quickly, helping organizations develop a fail-fast approach that alerts them to problems immediately, and makes a fast turnaround possible when something needs to be fixed.
3. Better security and compliance environment
Hyper-scale public cloud service providers such as AWS, Google Cloud, and Microsoft Azure each spend billions of dollars every year on cyber security upgrades — sar more than most organizations can spend on their own, with the ability to achieve scale at a level not available to most users. This is a key incentive to using the public cloud, and more and more users are recognizing this aspect.
4. Ability to launch new products and services
Users said that one of the most important benefits is the support they get from the computing infrastructure in allowing them to introduce new products and services, as well as the internationalization of new digital products and services.
5. Enhanced customer engagement and experience
New digital capabilities and services have enabled users to improve the customer experience, particularly from using advanced ML and AI tools to drive personalization, supported by the scalable infrastructure and computing resources provided by public cloud.
6. Lower costs
Not all organizations realize immediate cost reductions. This is especially the case for larger enterprises. More often than not, they end up with a hybrid model which results in a more complex operating environment for the organizations, and as a result they do not realize immediate cost savings.
To realize cost benefits, these businesses need to transform their entire architecture and make their systems compatible with the public cloud, including, in some cases, redesigning applications rather than simply using the public cloud to store data or for computing tasks. Users that consolidate their IT management functions under the public cloud are able to achieve cost efficiencies that result from operating with smaller, fully autonomous agile IT teams that are able to focus on business rather than on managing IT infrastructure.
Although public cloud adoption in the markets analyzed in the BCG study was still emerging compared to the United States and Western Europe in 2019, the recorded growth rate was much higher (25% in APAC vs. less than 20% in the United States and Western Europe).
The impact of cloud technologies on economic growth is impressive. According to BCG, cloud adoption is expected to contribute about $450 billion in GDP between 2019 and 2023 and could have the potential to create 425,000 jobs through direct and indirect effects on economic development in the six markets included in the study:
If Australia, India, Indonesia, Japan, Singapore, and South Korea continue to adopt public cloud at the current rates of deployment, we expect it to contribute approximately US$450 billion to the combined GDP of these six economies between 2019 and 2023. Approximately 425,000 jobs will be created as a direct result of the economic boost, with a potential for another 1.2 million jobs being influenced from second-order effects of stimulating the economy.
Of course, the widespread adoption of cloud computing technologies does not come without challenges. BCG’s study highlights three different categories of challenges that organizations face in adopting public cloud solutions:
- Challenges related to the understanding of the public cloud as a product, such as understanding of data privacy features, the complexity of managing a multi-cloud environment, concern about cloud service relationships, and understanding of product performance.
- Challenges linked to their internal organization, such as concern about how to migrate or integrate legacy data, especially in heavy data generating industries, and concern about getting people to accept organizational change.
- Challenges linked to unclear policies or regulations.
Among the key players, Google Cloud certainly plays a leading role in APAC economies. But how is Google doing in the region? Let’s find out!
Google Cloud in the APAC Region
According to a 2020 report by Analysys Mason:
In response to increasing demand for online content and services, including cloud services, Google has made significant investments in network infrastructure globally. In Asia-Pacific (APAC), Google has invested over USD2 billion since 2010. It purchases two-thirds of its international bandwidth in the region from APAC carriers and is an investor in six already-deployed submarine cable systems.
Google’s investments in the APAC region have already boosted the growth of the region’s economies and will continue to do so in the coming years. This is both in sectors directly related to technology and spills over into other sectors and the region’s economy as a whole.
In addition, according to estimates from the aforementioned study:
Google’s network investment led to 1.1 million additional jobs as of 2019 and an extra USD430 billion in aggregate GDP for the region between 2010 to 2019.
Google’s investments in the region helped to connect APAC economies to each other and to other regions, enabling companies and organizations in the region to reduce latency and increase availability and security in data transmission.
In recent years, Google has continued to invest in the region’s infrastructure. The PLCN, Indigo, and JGA-S systems cables helped boost the edge network infrastructure across APAC cities. In 2022, the new Topaz cable was added to connect Canada and Japan.
Analysys Mason also estimates that:
[…] these network infrastructure investments by Google led to 1.3 million additional jobs as of 2021 and USD 640 billion in aggregate GDP for the region (real 2020 USD) from 2010 to 2021. Continued network investments from Google are expected to support 3.5 million additional jobs by 2026 and drive additional economic benefits of approximately USD627 billion in GDP (real 2020 USD) over the next five years (2022–2026).
The Cloud Market in Australia
A joint report from Telstra Purple and Omdia (State of Cloud, Edge, and Security in Australia 2022-23) reveals how Australian companies and organizations are achieving digital transformation through the cloud, the role of edge computing, and the critical role of cloud security.
The adoption rate of cloud computing technologies in Australia is proceeding fast, although there are several areas for improvement to consider. The report highlights the following:
- The hybrid cloud remains the architectural solution of choice for organizations oriented towards cloud-native solutions. Leading companies have embarked on a journey of architectural improvement that takes advantage of hybrid cloud and edge computing. There is now a well-established awareness among Australian businesses of the critical importance of a high-performance network.
- Interest aroung edge computing is growing fast. Australian businesses are aware of the enormous potential of edge technologies that can bring low-latency, high-performance cloud capabilities even closer to corporate sites. Currently, edge computing adoption is still in the exploration stage, but leading organizations are addressing the strategy, skills, and cost impacts of industry use cases. Additionally, service provider investments are fast following these customer journeys and are rapidly adopting hybrid cloud solutions.
- The returns in terms of cost and reliability improvements are already tangible, but leading companies are looking to further accelerate the transition. Additionally, the report highlights that only a third of technology executives are “well prepared” for migrating their remaining critical applications to the cloud. Future migrations are hampered by poor preparation in cloud strategy, assessment, and planning.
- The main concern in this time of transition to the cloud is security. The report highlights organizational elements, such as the lack of clarity on responsibilities between cloud providers, their partners, and customers. Another cause for concern is the lack of integration between cloud security and existing tools (for example, SIEM).
The report also provides interesting data related to the growth of the cloud market in Australia:
Thirty-three percent of enterprise applications are now in the public cloud. Over one year, the 13% jump in adoption highlights the uptick in migrating enterprise applications to enable technology-fuelled innovation.
Despite the acceleration in public cloud adoption, hybrid cloud remains the dominant architecture; 67% of Australian firms rely on the networked private cloud, public cloud (PaaS, IaaS, and Serverless), and edge computing to deliver mission-critical applications and workloads.
Midsize businesses and government organizations have adopted the public cloud more aggressively than large enterprises. This is most likely due to smaller budgets and less technology debt of small and medium-sized companies compared to larger enterprises. But also to the fact that on average SMEs are more agile than larger organizations.
Despite concerns about security and the diversity in how Australian organizations are adopting cloud infrastructure, the road is well established. In the words of Gretchen Cooke, Growth and Transformation Executive at Telstra Purple:
The cloud offers greater scalability, agility, and efficiency. In an uncertain market full of digital-savvy competitors, the difference between success and failure isn’t ‘if’ but ‘how’ to embark on your cloud journey
Google Cloud in Australia
To support the growth of connectivity in Australia and enforce its presence in the APAC region, in 2021 Google launched the Melbourne cloud region, which complements the former Sydney cloud region to offer residents in Australia and New Zealand benefits in terms of “low latency and high performance of their cloud-based workloads and data.”
In Australia, Google Cloud supports almost A$3.2 billion in annual gross benefits to businesses and consumers. This includes A$686 million to businesses using Google Workspace and Google Cloud Platform, another A$698 million to Google Cloud partners, and A$1.8 billion to consumers.
But Google’s investments in network infrastructure go far beyond the two cloud regions.
According to the Economic impact of Google’s APAC network infrastructure report from Analysys Manson:
Australia has one of the most developed telecoms landscapes in APAC and, as of 2019, 87% of its population was connected to the internet. Internet traffic generated across both fixed and mobile networks has been growing strongly at around 51% annually from 2010 to 2019, reaching 29EB in total in 2019.
Furthermore, to better understand the state of Australia’s international connectivity, the same report notes that in 2019 Australia was connected to the rest of the world through 12 undersea cables that offered a total of 205Tbit/s in potential capacity. Telstra, the country’s leading telecommunication company, had a stake in seven of these cables.
Google’s investments in network infrastructure have contributed to the growth of Internet usage in Australia, enabling 5% of overall traffic in 2019.
The report also highlights how Google’s investments in network infrastructure have numerous benefits:
- Improvements in performance and reliability of cloud services, resulting in overall improvement and cost-effectiveness of the network infrastructure in Australia.
- Improvement of link diversity and support for the expansion of Google’s edge infrastructure.
- Lower latency, faster end-user speeds, lower cost of international bandwidth.
All this results in a boost to the growth of Internet traffic generated by both consumers and businesses in Australia.
The impact on the Australian economy is considerable. Analysys Mason estimates that:
[…] the additional internet usage enabled by Google’s network infrastructure investments has driven an additional cumulative USD 46 billion in GDP (in real terms) in Australia from 2010 to 2021. Following the deployment of JGA-S and Indigo, we forecast an additional cumulative USD 64 billion in GDP enabled by Google’s network infrastructure investments between 2022 and 2026.
Google’s investments will also have a strong impact on the labor market. According to the same study:
The economic benefits arising from Google’s network infrastructure investments lead to direct job creation in sectors such as telecoms and construction. Indirect job creation is prominent in industries that can benefit most from improved internet connectivity and digitalization, namely IT, financial and professional services, and manufacturing. We estimate that up to 41,000 direct and indirect jobs were supported through Google’s network infrastructure investments in 2021, growing to 68,000 by 2026
It is also worth noting that in 2021, Google announced the launch of the Digital Future Initiative — a $1 billion investment in local infrastructure, skills, and research to help build Australia’s digital economy.
The Cloud Market in India
India’s position in the economic context of APAC and the world is well summarized in the 2019’s WEF report:
India is the largest democracy in the world and the second most populous nation, with nearly 1.35 billion people. It is also the sixth-largest economy, with a GDP of $2.6 trillion in 2017. In purchasing power parity (PPP) terms, India ranks third behind the United States (US) and China. As one of the world’s fastest-growing economies, with a current and projected annual GDP growth of nearly 7.5%, India is a critical engine of global economic growth.
India is a large and fast-growing public cloud market in APAC, projected to grow at a CAGR of 25% from US$3 billion in 2018 to US$8 billion in 2023.
India’s cloud market is considered to be in the early stage, so it can be expected to grow at an even higher speed in the coming years in terms of public cloud and IT spending. A 2021 Gartner study predicted growth of 29.6% between 2021 and 2022 and that growth would continue at a similar pace over the next four years:
End-user spending on public cloud services in India is forecast to total $7.3 billion in 2022, an increase of 29.6% from 2021, according to a recent forecast by Gartner, Inc.
The size of the Indian market suggests rapid growth in the adoption of cloud technologies, in several application fields. Consider, for example, video streaming.
Companies delivering streaming content are the ones that find public cloud adoption more critical, especially those falling among Digital Native Businesses:
it is the newer companies delivering streaming content that find the public cloud critical to their growth. Major streaming media players are using the cloud for content delivery and consumer research to enhance their customer experience. Most large content providers have scaled rapidly on the back of the public cloud infrastructure, using AI and ML to target audience programming.
According to the BCG report, the most widely adopted service model in 2019 was SaaS, but the adoption of IaaS and PaaS models is growing at a faster pace.
The overall impact of the adoption of public cloud solutions in India is expected to be between US$90 and US$130 billion between 2019 and 2023.
BCG estimates that:
Approximately 85% of the impact will come from the gains to industry verticals such as digital natives, media, retail, and financial services, with only about 15% coming from the cloud service providers themselves.
The growth boost driven by the increased use of cloud technologies in India could support the creation of 143,000 to 425,000 direct jobs, and 375,000 to 1.25 million indirect jobs.
In the most favorable scenario, the report cited above estimates an impact on the labor market that could boost the creation of 1.6 million new jobs.
Google Cloud in India
In such a fast-growing market, Google is involved with considerable investments in several areas. To date, there are two Google Cloud regions in India, Mumbai, launched in 2017, and Delhi, launched in 2020.
According to Thomas Kurian, CEO at Google Cloud:
We have seen enormous growth in demand for Google cloud services in India so expanding our footprint in a new cloud region gives us the ability to offer more capacity for growth over many years. It’s a large commitment from us in capital and infrastructure investment and it’s designed to allow us to capture the opportunity that we see around growth.
Google Cloud’s presence in India is supported by a number of partnerships with private companies, but Google is also committed to providing its cloud services to public sector organizations as well, achieving a full Cloud Service Provider (CSP) empanelment, successfully completing the STQC (Standardisation Testing and Quality Certification) audit from the Ministry of Electronics and Information Technology (MeitY):
This empanelment will enable the Indian Public Sector to deploy on Google Cloud, including government agencies at the Central and state level, and PSUs across sectors like Power, BFSI, Transportation, Oil & Gas, Public Finance, etc.
The importance of the Indian economy in the APAC region and at a global level is also witnessed by the opening up of a new Google Cloud Office in Pune aiming to fuel “customer growth and valued offerings to organizations of all sizes”.
The Cloud Market in Indonesia
With over 275 million people, Indonesia is the world’s fourth-most populous country (source Wikipedia). With a huge domestic market, geographically located strategically in the Pacific Rim, Indonesia is one of the fastest-growing digital economies in Southeast Asia.
By 2025, Indonesia’s digital gross merchandise value (GMV) is expected to hit $124 billion, up from $44 billion in 2020 (source Jakarta Globe).
In this scenario, the spread of cloud technologies has enabled a growing number of SMEs to gain access to technologies previously accessible only to larger companies:
As more Indonesians come online and local businesses switch to cloud solutions, demand for cloud services is growing exponentially. The private sector has driven a significant part of this growth in cloud adoption. Grab, for instance, has used cloud computing technology to rapidly accelerate the digitization of SMEs by helping merchants with zero online presence get onboarded to the platform, set up digital payment and delivery systems, and access business analytics tools.
In a study published in March 2020 commissioned by the Indonesian Ministry of Finance and the Asian Development Bank, a team of experts explored the effects of emerging technologies on the Indonesian economy. Commonly referred to as Industry 4.0, these technologies include cyber-physical systems, cloud computing, big data, AI, machine learning, and IoT (the Internet of Things).
Based on interviews with a total of 502 local firms, located in 4 provinces and belonging to 6 sectors, the study concludes with a forecast of the effects of the adoption of these technologies on the Indonesian economy:
Technology adoption could add up to $2.8 trillion to the Indonesian economy by 2040, spurring growth in gross domestic product (GDP) by an additional 0.55 percentage points annually over the next 2 decades.
In addition, although Indonesia is among ASEAN countries that invest the least in R&D:
A number of initiatives already address some of these gaps. Notably, Making Indonesia 4.0 is a national initiative to integrate Indonesia into the Fourth Industrial Revolution through a number of innovation investments. The government estimates that Making Indonesia 4.0 will help create 10 million additional jobs, raising net exports to the equivalent of 10% of the GDP, and boosting productivity growth.
Despite the low R&D expenditure, several studies agree on Indonesia’s enormous potential for economic growth through increased adoption of cutting-edge technologies such as robotics and cloud computing.
In a 2021 BCG study, Indonesia is found to be among the markets where cloud spend is expected to grow at a much faster rate than APAC developed economies, with a CAGR of 25%.
As you might expect, at the micro level, the adoption of new technologies, specifically cloud computing technologies, is quite diverse.
According to PwC Indonesia, in 2021 89% of SMEs were actively using cloud services and 9% were planning to use them in the near future. Meanwhile, among large enterprises, 80% were already using cloud computing services, while the rest of them were planning to adopt cloud technologies within the next three years.
If we analyze in more detail the data provided by the aforementioned study, it appears that the small and medium-sized enterprises in the sample use a variety of cloud services. These are in order the most frequently used cloud services among SMEs:
- Ecommerce cloud solutions (60%)
- File sharing services (~60%)
- Payment solutions (~40%)
- Productivity applications (~40%)
- Website hosting (~40%)
- Email services (~20%)
- Video conferencing (~20%)
- Content distribution (~20%)
- Accounting (~20%)
When it comes to the types of cloud service models, the IaaS model is the most adopted among large firms, although some companies reported using more than one service model, including IaaS, Paas, and SaaS: 67% of large enterprises in the sample are using IaaS, followed by SaaS at 60%, and PaaS at 40%.
The primary reasons for the adoption of cloud computing technologies among small and medium-sized Indonesian companies are improved operational efficiency (67%), revenue generation (23%), and cost savings (19%). Responses from larger companies are diverse:
- Improve IT operations (80%)
- Convert IT costs to OPEX (53%)
- Improve organization productivity (33%)
- Develop solutions (20%)
- Expand system capacity (20%)
- Manage data (13%)
- Disaster recovery (7%)
Enterprises in the sample are aware of the great benefits of adopting cloud computing. Large enterprises rank scalability first among the potential benefits of cloud technologies. Other recognized benefits are the achievement of strategic goals, drive for innovation, lower investment, lower IT costs, and lower OPEX.
Time savings is the productive benefit most recognized by large companies, while cost savings are most valued by small and medium-sized enterprises.
Google Cloud in Indonesia
According to the 2022 update of the Economic impact of Google’s APAC network infrastructure report, Indonesia has one of the fastest-growing economies among ASEAN markets, with the internet economy driving the most growth.
Internet usage is sky-high among Indonesia’s population and businesses, especially in terms of mobile connectivity. The report estimates that 98% of the population is in the range of 4G mobile services.
In this scenario, Google’s invested in two new submarine cables in addition to the Indigo-West cable: Apricot and Echo.
- Indigo-West (2019) — connecting Australia, Indonesia, and Singapore (see on the map)
- Echo (2023) — connecting Guam, Indonesia, Palau, Singapore, and the USA (see on the map)
- Apricot (2024) — connecting Guam, Indonesia, Japan, the Philippines, Singapore, and Taiwan (see on the map)
Apart from investments in submarine cables, Google continues to invest in edge infrastructure, adding PoPs and GGC nodes to bring improvements to the connectivity system in Indonesia.
The report estimates that Google’s investments “generated an additional cumulative $29bn in GDP (in real terms) in Indonesia from 2010 to 2021, and supported up to 299,000 jobs in 2021”. The report also forecasts an additional cumulative $94 billion in GDP enabled by Google’s investments between 2022 and 2026.
The region’s international connectivity is also remarkable, due to its strategic geographic location in Southeast Asia:
By the end of 2021, Indonesia was connected to 20 international submarine cable systems that together offered a total of 372Tbit/s in potential capacity.
Google is also supporting other projects in several areas, such as information, digital skills, sustainability, and more. As an example, the Bangkit Academy program prepares students with in-demand skills and tech certifications.
The Cloud Market in Japan
In Japan, companies are quickly moving to the cloud: according to IDC Japan, the public cloud market will grow by 18.8% per year until 2026, and the market size in 2026 will reach 3.76 trillion yen, about 2.4 times the size in 2021. In addition, the report added that the domestic market size of public cloud services in 2021 was 1,590 billion yen, an increase of 28.5% from 2020.
The chart below compares sales in billions of yen (JPY) on the left with the year-on-year market growth rate (%) on the right.
In addition, according to a survey conducted by the MM Research Institute among information systems managers of 33,922 domestic companies, the market size of cloud services in 2021 is actually estimated at 3,572.3 billion yen, considering both public and private cloud services.
These figures are confirmed by another survey conducted by the MM Research Institute, an ICT market research consultancy company, which reports that the market size for cloud services in 2021 was estimated to be around 3,572.3 billion yen, an increase of 24.3 percent over 2020.
The graph below shows the steady growth of the market (based on MM Research Institute forecasts). Interestingly, steady growth is observed for both public and private clouds, making it easy to understand the growth of the overall cloud market size.
The growth of PaaS and IaaS is particularly noteworthy. Both are characterized by low barriers to adoption due to their low capital investment burden. The fact that they can be used as needed may also be a factor in accelerating their adoption by enterprises.
In particular, MMRI expects the expansion trend to continue in the coming years, with the size of the private cloud market alone expected to reach about 4.1 trillion yen in 2026, up from 2,047.4 billion yen in 2021.
As for the public cloud services model, based on data collected from a sample of 1,042 businesses, 60.0% of companies using PaaS solutions use AWS (Amazon Web Services), followed by Azure (Microsoft Azure) at 48.2%, and GCP (Google Cloud Platform) at 28.8%. Among all IaaS users, AWS accounted for 54.7%, Azure 44.0%, and GCP 26.2%.
Let’s now look at the official sources. According to the Japanese Ministry of Internal Affairs and Communications:
Labor productivity of business operators consistently using cloud services from 2010 to 2020 is higher compared with business operators who are not using them
The data provided by the Ministry of Internal Affairs and Communications is extensive and gives us a very accurate idea of the state of adoption of Cloud Computing technologies in Japan and the trend we can expect to see in the coming years.
According to the ministry, 68.7% of enterprises were expected to use cloud services partially or extensively in 2020, up 4.0% from 2019, when it stood at 64.7%.
Looking at this data, it is easy to see that the adoption of cloud technologies has been growing steadily since 2015. The sectors where the cloud is most widely adopted are ICT, Manufacture, Real Estate, and Finance and Insurance.
Among enterprises using at least one could service, 87.1% responded that it was beneficial or very beneficial for their businesses.
The most used services by Japanese companies are “file storage and data sharing” (59.4%), “email” (50.3%), and “information sharing/portal” (44.8%), while advanced cloud services such as “sales support” or “production management” are still little used.
You can read more about cloud adoption among Japanese enterprises in the Information and Communications in Japan 2021 whitepaper.
Google Cloud in Japan
Google recently announced the opening of their first hyper-scale data center in Japan — in Inzai City, Chiba — in 2023 aiming to give people in Japan faster, more reliable access to Google’s tools and services, support economic activity and jobs and connect Japan to the rest of the global digital economy:
The Chiba data center is part of a $730 million investment in infrastructure that began last year and will continue through 2024.
The new data center adds to the two existing cloud regions, Tokyo and Osaka, that provide storage and services for Japanese businesses.
Google has invested more than $2 billion in network infrastructure across APAC. The investments made specifically for Japan include three submarine cables, 5 private facilities and 11 IXPs with Google PoPs, and about 50 percent of bandwidth purchased from telcos.
The investment program includes the Topaz subsea cable, which should be ready for service in 2023, and will become the first fiber cable to connect Japan with the west coast of Canada.
The width of a garden hose, the Topaz cable will house 16 fiber pairs, for a total capacity of 240 Terabits per second (not to be confused with TSPs). It includes support for Wavelength Selective Switch (WSS), an efficient and software-defined way to carve up the spectrum on an optical fiber pair for flexibility in routing and advanced resilience.
Google’s investments help Japan achieve huge benefits from increased Internet use, both in terms of GDP growth and jobs (Image source: Analysys Mason):
Boosts in productivity and further enablement of digital applications have led to the creation of new jobs. We estimate that up to 401,000 direct, indirect, and induced jobs were supported through Google’s network infrastructure investments in 2021, growing to 739,000 in 2026.
Overall spending on cloud services and technologies is also expected to significantly grow in the coming years, from $8 billion in 2018 to $18 billion in 2023, with an 18% compound annual growth rate (CAGR).
The data above are provided by Analysys Mason in a report commissioned and sponsored by Google. For a more detailed overview, see also Economic Impact of Google’S APAC Network Infrastructure — Focus on Japan and 2022 Update.
But as in other countries around the world, Google’s investments in local markets are not limited to network infrastructure.
Taking into account the digital skills divide between Japanese businesses that use the internet effectively and those that don’t, Google declared their commitment to closing the gap providing digital skills training to million people since 2016, investing a significant amount of resources in professional training.
According to Sundar Pichai, CEO of Google and Alphabet, Google supported 10 million people in Japan through the Grow with Google program and adapted their training programs to people and businesses affected by the pandemic:
That includes the Japan Reskilling Consortium, which we launched in June. It’s a collaboration between businesses, governments, and the nonprofit sector, providing skills training in areas like artificial intelligence and digital marketing and a job-matching service to help trainees find work opportunities. The consortium already offers more than 300 training programs with more than 90 partners.
Google’s efforts in Japan also extend to enhancing the country’s technology infrastructure:
As major Japanese companies and government departments look to modernize how they operate, we’re working hard to help them adopt cloud computing
See also how some Japanese businesses are embracing Google Cloud for digital transformation.
The Cloud Market in Malaysia
Malaysia is one of the fastest-growing economies in the APAC region. The 2020 WEF report — Future of Consumption in Fast-Growth Consumer Markets: ASEAN — includes Malaysia in the group of the three most developed economies, along with Singapore and Thailand.
The adoption of digital technologies and cloud computing is fast and is also being supported by government programs such as the Digital Transformation Acceleration Programme (DTAP), an SME government grant program aiming to make Malaysian companies more competitive and “achieve their digital transformation goals”.
According to Twimbit, as of January 2021, 77.1% of companies operating in different sectors in Malaysia adopted some type of cloud service. Digital Native Businesses alone account for 33% of the total IaaS spending, meaning US$53.6 million. The ecommerce industry alone accounts for 47% of the Digital Native Businesses’ spending.
According to Malaysia Digital Economy Blueprint, an official report from the Economic Planning Unit of Malaysia Prime Minister’s Department, 44% of micro, small and medium enterprises are using cloud computing, but 82% of them are using mainly for storing documents, photos, and videos.
Another study from SME Corp Malaysia and Huawei reports that only 35% of Malaysian SMEs are using cloud computing for more advanced business applications. The study also highlights a considerable lack of awareness of the potential of cloud computing technologies, especially among small and medium-sized enterprises:
Moreover, many of these SMEs are also not aware that cloud, IoT, and data analytics could help transform their businesses. To illustrate, of those who are aware of cloud computing services, 42% of them do not know how to leverage cloud computing to transform their businesses. This clearly shows that SMEs need guidance and training on what digitalization is and its benefits, and to get them to move beyond just computerization.
This suggests that the Malaysian economy requires significant public and private investment, but has great possibilities for further economic development from the adoption of cloud technologies.
In the Digital Economy Blueprint, the Malaysian government specified the Strategic trusts and national actions to foster economic development in the region:
- Drive digital transformation in the public sector
- Boost economic competitiveness through digitalisation
- Build enabling digital infrastructure
- Build agile and competent digital talent
- Create an inclusive digital society
One of the key objectives is to “provide access to extensive and high-quality digital infrastructure, which will enable people to participate in the digital economy”:
Digital infrastructures focused under this thrust comprise broadband, data centers, and submarine cable landing stations. Such infrastructures allow for the generation, flow, exchange, consumption, and storage of data.
This goal will be pursued through several actions:
- Review laws and regulations to improve provision for digital infrastructure
- Broadband to be mandated as basic infrastructure to ensure internet access for new developments
- Speed up approval process in deploying broadband infrastructure
- Provide real-time broadband demand platform for effective planning and monitoring
- Boost capabilities of domestic data center companies to provide high-end cloud computing services
- Attract more international submarine cables landing in Malaysia to expand global connectivity
Google Cloud in Malaysia
As of 2021, Google doesn’t have investments in submarine cables landing in Malaysia. However, as also reported by Analysys Mason, Google announced investments in two new cables — MIST and IAX, which are expected to be ready for service in 2023.
Google has also invested in edge infrastructure, deployed points of presence (PoPs) in three private peering facilities, and cross-connected to one internet exchange point (IXP).
Google’s investments help increase download speed and reduce network latency in Malaysia, enabling ISPs to deliver innovative cloud services, video streaming/conferencing, and gaming.
The impact of Google’s investment in cloud infrastructure in Malaysia is noteworthy. According to Analysys Mason, “the increase in internet usage in Malaysia contributed an additional cumulative USD8.2bn billion in GDP from 2010 to 2021”:
Google’s continued network investments from 2021 onwards, including two submarine cable deployments, are expected to spur higher internet traffic usage. Google’s historical and continued investments are expected to contribute an additional cumulative USD8.9 billion in GDP from 2022 to 2026, of which USD2.2 billion would be in 2026 alone.
Google’s investments in network infrastructure will also impact the Malaysian economy with the creation of approximately 40,000 jobs expected by 2026.
The Cloud Market in Singapore
In recent years, Singapore has gained prominence among APAC countries in terms of connectivity, IT investment, and cloud technologies.
According to a World Economic Forum report, Singapore is the most developed economy in the APAC region, with a GDP per capita similar to the US. The population is fully or almost fully urbanized, banked, and online, and the country ranks second among 190 countries for ease of doing business.
Singapore’s digital-first vision is nurturing a digital culture where digital technologies are fully integrated into everyday life, with the goal of improving government operations and fueling economic growth and quality of life:
Our vision for a digital-first Singapore is one where a Digital Government, Digital Economy and Digital Society harness technology to effect transformation in health, transport, urban living, government services, and businesses.
Singapore has also been named the smartest city in the world, according to the 2021 IMD Smart City Index, and ranks first in 2021 Alibaba survey about the enterprise adoption of cloud-based services:
According to the survey findings, Singapore leads the Southeast Asia region in cloud adoption, with nearly 9 out of 10 ITDMs surveyed saying their companies are already using cloud-based IT solutions. Another indication of the Cloud maturity in Singapore can be observed in the top concerns flagged by ITDMs surveyed. Compared to regional counterparts where integrating Cloud-based solutions into existing IT infrastructure was one of the key issues, Singapore’s top concerns were a tie in cost and security (57%) and availability (49%).
Singapore has one of the most connected economies in the APAC region and is one of the fastest-growing internet markets in the world.
Analysys Mason reports that:
As of 2019, 88% of its population was connected to the internet. Internet traffic generated across both fixed and mobile networks has been growing strongly at around 29% annually from 2010 to 2019, reaching 4EB in total in 2019.
The same study reports that “close to 100% of households have access to fiber broadband and 99% of the population is within range of 4G mobile coverage.”
Singapore also leads the way in terms of network infrastructure:
Singapore is also one of the main submarine cable hubs in APAC, and is connected to 23 international submarine cable systems that, as of 2019, offered a total of 857Tbit/s in potential capacity.
As you might expect, Singapore also ranks among the top countries in the region in terms of investment in cloud computing technologies. In a 2021 BGC study commissioned by Cisco, it emerges that Singapore is among the ASEAN economies where public cloud spending is expected to grow at a faster rate, with a CAGR of 20%.
In addition, another BCG study reports that many large companies in Singapore have begun to adopt some type of cloud service and many are beginning to use cloud solutions to implement advanced technologies such as artificial intelligence and machine learning.
Among large companies, the most widely used service model is SaaS, but the PaaS model is growing fast at an expected rate of 25% through 2023.
Google Cloud in Singapore
According to the mentioned Analysys Mason’s study, Google’s investment in Singapore contributed to increased Internet usage, equivalent to 20% of all Internet traffic in 2019:
Google’s investments in network infrastructure not only improve service performance and reliability of its content and services, they also improve the overall performance and cost-effectiveness of internet infrastructure in Singapore. Investments in submarine cables bring new supply, improve the diversity of links and also support the expansion of Google’s edge infrastructure in Singapore.
The 2022 report update adds more details:
Singapore is one of the most successful and attractive digital and economic hubs in the world. It has the highest number of submarine cable and data centre investments in South East Asia. In Singapore, Google has investments in SJC and Indigo cables, and has announced further investments in four upcoming cable systems (MIST, IAX, Echo and Apricot). Google has also deployed eight peering locations in Singapore, and invested in cache nodes all across the city. These investments will generate an additional cumulative USD16 billion in GDP between 2022 and 2026.
Google has a presence in Singapore with the Jurong West Cloud Region, which was also Google’s first data center in Southeast Asia. But there is more than just the Cloud Region, because Google is an investor in two submarine cables reaching Singapore, and more investments have been planned:
- SJC (2013) — connecting Brunei, China, Japan, Philippines, and Singapore (See on map)
- Indigo-West (2019) — connecting Australia, Indonesia, and Singapore (See on map)
- MIST (2023) — connecting India, Malaysia, Myanmar, and Singapore (See on map)
- IAX (2023) — connecting India, Malaysia, Maldives, Singapore, Sri Lanka, and Thailand (See on map)
- Echo (2023) — connecting Guam, Indonesia, Palau, Singapore, and the USA (See on map)
- Apricot (2024) — connecting Guam, Indonesia, Japan, the Philippines, Singapore, and Taiwan (See on map)
In addition, Google continues to invest in edge infrastructure and PoPs. Google’s massive investments have contributed to a reduction in the cost of bandwidth as well as improved performance of network connections.
The study estimates the effects of Google’s investment in Singapore at $12.9 billion in GDP impact from 2010 to 2021, and forecast “an additional cumulative USD15.6 billion in GDP enabled by Google’s investments between 2022 and 2026”.
The Cloud Market in Thailand
According to the cited WEF report, Thailand is in the group of the three most developed economies among ASEAN member states, along with Singapore and Malaysia, combining high economic development with fast growth rates in connectivity and telecommunications, deployment of 4IR technologies and cloud computing technologies.
Analysys Mason reports that:
In recent years, Thailand’s telecoms landscape has seen significant development, and fibre broadband connections and internet usage have increased rapidly. Internet traffic generated across both fixed and mobile networks in Thailand has grown strongly at an annual average of 44% from 2017 to 2021, reaching a total of 51EB in 2021.
According to the Digital 2022 report for Thailand,
- As of January 2022, there were 54.50 million internet users
- The number of internet users increased by 108,000 (+0.2%) between 2021 and 2022.
- In January 2021, Internet penetration was 77.8%.
Boosting economic growth is enhanced by public investment and initiatives to create fertile ground for innovation and international investment, such as Thailand 4.0, a new economic model where economic growth is driven by innovation, technology, and creativity to ensure social welfare and inclusiveness, respect for human values and environmental protection.
Google Cloud in Thailand
Thailand’s relevance in the Asia Pacific region’s economic ecosystem is confirmed by the announced launch of a new Google Cloud region.
According to Ruma Balasubramanian, Managing Director, Google Cloud Southeast Asia, this will be “Google Cloud’s most significant infrastructure investment in Thailand to date to support its growing local customer base, including companies in regulated industries”.
The Thailand cloud region will deliver high-performance and low-latency services to local organizations, with three zones offering protection against service disruptions.
According to data from an AlphaBeta research study commissioned by Google, “cloud can create up to 2.5 trillion baht in annual economic value in Thailand by 2030. That amount is equivalent to 16% of local GDP in 2020.”
While there are no plans to invest in submarine cables in Thailand, Google continues to invest in edge infrastructure and points of presence (PoPs). “Google also invests in content caches, and Google Global Cache (GGC) nodes are already deployed in 26 cities across Thailand”.
These investments are expected to generate benefits in terms of both GDP growth and jobs. Analysys Mason estimates that:
[…] the increase in internet usage in Thailand contributed an additional cumulative USD8.8 billion in GDP (in real terms) from 2010 to 2021. Google’s continued network investments from 2021 onwards, including two submarine cable deployments, are expected to spur higher internet traffic usage. Google’s historical and continued investments are expected to contribute an additional cumulative USD17.1 billion in GDP from 2022 to 2026, of which USD4.7 billion would be in 2026 alone.
Google’s investment in Thailand will also impact job creation. According to the mentioned study, Google’s investment in network infrastructure in Thailand is expected to foster the creation of 20,000 jobs in 2021, which could grow to 97,000 by 2026.
But one of the challenges Thailand will face to stay competitive and sustain economic growth is to generate a workforce with high digital skills.
As reported on the Google Cloud blog, “By 2030, the total demand for digital talent in Thailand will exceed 1 million workers. So there is an urgent need to build up a digital workforce to match the demand”:
Thailand’s digital transformation could generate up to THB2.5 trillion (USD79.5 billion) in annual economic value by 2030. Around 78% of business leaders in Thailand put digitalization as a key strategy in 2021, while the World Economic Forum’s “Future of Jobs Report 2020” showed that only 55% of workers in Thailand are literate in the required digital skills for future work. There is an urgent need to address Thailand’s digital skills gap.
Aiming to support Thailand in developing digital skills, in October 2022 Google launched the Samart Skills program in partnership with the local government and leading educational institutions across Thailand.
The Cloud Market in Taiwan
According to Analysys Mason:
Taiwan is one of the most technologically advanced economies globally and also has a relatively developed telecoms landscape, with the majority of broadband subscriptions being full fibre. Internet traffic has been increasing at a dizzying pace, with an average growth of 43% between 2010 and 2021, reaching a total of 30EB in 2021.
In addition, since 2020, the digital connectivity and telecom landscape have significantly improved. In 2021 Taiwan was connected to 21 international undersea cables, with investments from companies such as Google, Microsoft, and Meta.
A Business Wire study provides similar data. The data center market is expected to grow at a CAGR of 18.4% from 2022 to 2027, while significant investments were made in 5G technologies.
Here are a few key points from the report:
- Taiwan is one of the most important connectivity hubs in the APAC region. Implementation of 5G, increase in demand for cloud services, adoption of Artificial Intelligence and Machine Learning, big data and IoT solutions, and renewable energy procurement are the key factors driving the Taiwan data center market.
- Several technology-based industrial parks offer tax incentives for facility development and other technologies such as AI, cloud, and IoT.
- The amount of data generated is rapidly growing due to the expanding adoption of technologies such as IoT, big data, and AI.
- Demand for cloud services is also growing at a remarkable rate. This resulted in the establishment of partnerships between cloud service providers such as AWS, Google, Azure, and TSMC (Taiwan Semiconductor Manufacturing Company).
- The government is funding significant investment to consolidate business growth in Taiwan by implementing digital services across industrial, commercial, and public sectors.
Google Cloud in Taiwan
Google’s investments in undersea cables and network infrastructure have brought significant improvements to the connectivity ecosystem in Taiwan. This is both in terms of the quality of Google’s services and in terms of overall national connectivity and economic growth.
Also thanks to Google’s investment, Taiwan’s internet users benefit from “lower latency, faster speeds, and low international connectivity costs, and consequently, there is an uptake of new internet use cases and applications.”
Google has invested in two submarine cables and announced investments in a third cable that is expected to be operational starting in 2024:
- FASTER (2016) — connecting Japan, Taiwan, and USA (See on map)
- PLCN (2016) — connecting Philippines, Taiwan, and USA (See on map)
- Apricot (2024) — connecting Guam, Indonesia, Japan, the Philippines, Singapore, and Taiwan (See on map)
In addition, Google continues to invest in Points of Presence (PoPs) and edge infrastructure. According to Analysys Mason:
We estimate that the additional internet usage enabled by Google’s network infrastructure investments has driven an additional cumulative USD25.7 billion in GDP (in real terms) in Taiwan from 2010 to 2021. As a result of Google’s historical and future network infrastructure investments in Taiwan, we forecast an additional cumulative USD37.1 billion in GDP enabled by Google’s investments between 2022 and 2026.
Improvements in connectivity and digitization have a strong impact on job creation. The report estimates that “the increase in GDP from Google’s network infrastructure investments supported up to 64,000 direct, indirect, and induced jobs in 2021, growing to 110,000 in 2026”.
Google, thus, consolidates its presence in Taiwan, in compliance with local regulations and environmental sustainability.
The Cloud Market in South Korea
According to Analysys Mason, South Korea has one of the most advanced telecom landscapes in the APAC region, with 96% of its population was connected to the internet in 2019, and Internet traffic has been growing steadily between 2010 and 2019 at around 25% annually, reaching 150EB in 2019.
South Korea is currently connected to nine international submarine cables — a potential capacity of 430Tbit/s in 2019 — with additional two cables to be added by 2025.
The potential of the cloud market in South Korea is also confirmed by the BCG’s South Korea’s Market Report:
South Korea’s public cloud market has robust growth potential in APAC. With 15% CAGR, market expected to double in size from US$1.5 billion (2018) to US$3 billion (2023).
This is an annual growth of 15%.
In terms of cloud service models, the mentioned study points out that the SaaS model is definitely predominant in South Korea, accounting for 45% of the market, while the IaaS model is slowly gaining market share, “and is expected to account for about one-third of the market by 2023”.
The PaaS model is also on the rise, especially among large enterprises:
South Korea’s conglomerates and other large established organizations have begun to migrate more of their applications to the public cloud, particularly to take advantage of the easy access to advanced technologies such as artificial intelligence, big data, and machine learning. A large electronics manufacturer, for example, has announced it will migrate all of its data center applications to the public cloud. Some large players have started moving data to the public cloud for their global operations and adding newer use cases for local operations.
The cited study also provides estimates of the economic impact of cloud technologies in South Korea. More specifically, growth in annual GDP and new jobs will depend on how the government, users, and cloud service providers will combine their efforts to a wider could adoption among Korean enterprises.
In the worst-case scenario, the public cloud should have an economic impact of $40B, with a CAGR of 12%, 0.5% of annual GDP, and the creation of 25,000 by 2023. But the study also assumes an explosive growth scenario:
Acceleration of the government’s ‘digital nation’ push and a greater presence of hyper-scale service providers can also help drive further growth, as will a heightened emphasis on achieving digital transformation in large organizations and deploying newer technologies like AI and machine learning in business and government applications.
In this scenario, the public cloud should have an economic impact of $60B, with a CAGR of 24%, 0.7% of annual GDP, and the creation of 107,000 by 2023.
Google Cloud in South Korea
At the moment, Google has no investment in submarine cables connected to South Korea, but in recent years they invested in edge infrastructure. According to Analysys Mason, “Google deployed PoPs in four private peering facilities (mainly for cloud services) and are cross-connected to IXPs at two locations”.
Although there are no plans to invest in submarine cables, Google’s presence has nonetheless enabled local ISPs to better manage bandwidth and transport more data, helping to increase download speeds.
Reducing latency and increasing internet speed are supporting ISPs in delivering innovative services such as cloud services, video conferencing, and gaming.
Analysys Mason report estimates that “internet traffic in South Korea between 2019 and 2024 would have been 4% lower in 2019 had Google not made investments in network infrastructure”.
According to the cited estimations, Google’s presence in South Korea would have contributed USD23 billion in GDP impact in South Korea from 2010 to 2019.
Although less impactful than in other countries in the region, Google’s presence in South Korea has still provided valuable support to economic growth:
Google’s continued investments in edge infrastructure, including that supporting the growth of GCP, from 2020 onwards are expected to enable ISPs to handle higher internet traffic. The historical and continued investments are expected to contribute an additional USD16 billion in GDP impact from 2020 to 2024, of which USD3 billion would be in 2024 alone.
According to the same study, Google’s presence in South Korea is supposed to have directly and indirectly supported the creation of 33,000 jobs by 2019, which would remain roughly stable through 2024.
Powered by Google and Cloudflare, Kinsta Is the Perfect Partner for Your Cloud Strategy
APAC markets are a very heterogeneous reality in terms of economic development, market trends, and adoption rates of cloud computing. But they all share extreme dynamism in economic, demographic, and social terms.
The average age of the population is much lower than in Europe and America, and this also implies different consumption patterns. Large segments of the population are digital natives, accustomed to living in a digital environment and inclined to purchase products and use services from their smartphones. And a growing number of digital native businesses are making their way into the market to meet the demand of this huge target audience.
In this scenario, the question is no longer whether and when to adopt cloud technologies, but how to integrate them into your organization.
Organizations of all types and sizes today need to integrate the cloud into their infrastructure to remain competitive in international markets, and this is especially true in evolving and growing markets such as those in the APAC region.
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Summary
In this article, we have offered an in-depth overview of the state of the cloud computing market in the APAC region based on data provided by private companies and public organizations.
We preferred to refer to data provided by national governments and international organizations, when available. When we were unable to find official data, we referred to data provided by reputable private companies.
Although published data are not always homogeneous because they are based on different samples and methodologies, all studies agree on the explosive growth of the region’s markets in terms of adoption of the most innovative technologies (4IR Technologies) such as cloud computing, population growth, and economic expansion.
Companies targeting APAC markets must take these factors into account to succeed, and adopting cloud computing solutions is essential.
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