Report Overview

Japan data center market is gaining significant traction because of the rapid increase in the data volume and the increasing penetration of data-generating devices such as smartphones, wearables, IoT devices, etc.

Japan Data Center Market- Industry Trends & Forecast Report 2027

Japan data center market was worth USD 6.6 billion in 2020 and is further projected to reach USD 10.4 billion by the year 2027, growing at a CAGR of 6.9% in the forecast period. The data center market is gaining significant traction and is flourishing at a high rate because of the rapid increase in the data volume and the increasing penetration of data-generating devices such as smartphones, wearables, IoT devices, etc. Furthermore, the expansion of enterprise and colocation data centers is anticipated to boost the Japan data center market during the forecast period.

Source: BlueWeave Consulting

Japan Data Center Market- Overview

Data centers are centralized locations consisting of servers, storage, networks, switches, routers, etc., and are used to collect, store, process, and distribute large amounts of data. The data centers are connected to the internet and other business networks. Organizations with significant financial capabilities establish their own data centers in order to function more smoothly and access their data more easily. On the other hand, small and medium-sized enterprises often opt for colocation data centers that prove to be cost-efficient.

Japan Data Center Market Forecast and Trends

Growth Drivers

Increasing Volume of Data

With the increasing penetration of data-generating devices such as smartphones, tablets, wearables, IoT sensors, AI devices, etc., and the introduction of high-speed networks such as 5G, data volume is growing rapidly. As a result of the growing amount of data, Japan requires a greater number of data centers. With the high concentration of hi-tech companies in Japan that invest significantly in adopting advanced technology, the market for data centers is growing as well.

Expanding Investing Towards the Construction of Data Center Facilities

The Japanese government and private players are significantly investing towards building new data centers and expanding the capacities of the existing ones. Additionally, companies are opting for greener options, such as solar power for powering data centers. For instance, Amazon.com recently partnered with Mitsubishi Corporation to build solar power stations in Japan to supply electricity to its data centers for ten years. Such investments are expected to boost the market in the forecast period.

Restraints

Negative Effects of Data Center on Environment

Data centers consume around 200 terawatt-hours (TWh) each year. These data centers consume so much energy they could power some countries. Furthermore, data centers contribute to around 0.3% of the overall carbon emissions. These negative effects of the data center on the environment act as a major obstacle to the growth of the data center market in Japan. In a nation like Japan, where the focus is swiftly shifting toward sustainable development, it may not be appropriate to build facilities that are power intensive or emit large amounts of carbon emissions.

Impact of COVID-19 on Japan Data Center Market

COVID-19-induced pandemic initially placed a heavy burden on Japan's data centers. In the move towards remote work and online education, the reliance on the internet and various apps grew rapidly, consequently affecting the functioning of the data centers. In response, Japan quickly expanded its data center facilities to meet the increasing demand for data centers. The government and private sector both took steps to establish data centers during the pandemic. Therefore, the Japan data center market flourished during the COVID-19 period. The market is also expected to grow steadily during the forecast period.

Japan Data Center Market - By IT Infrastructure

Based on IT infrastructure, the Japan data center market is segmented into servers, storage, and network. The servers segment accounted for the largest market share in 2020 as they are the main components that provide processing, memory, local storage, and network connectivity that drive applications. Servers are the infrastructure that hosts various applications and services. Companies in Japan, such as LANEX Corporation, Score Studios, EMERGO, etc., are developing software applications at an increasing rate, fueling the overall Japan data center market growth.

Japan Data Center Market - By Electrical Infrastructure

Based on electrical infrastructure, the Japan data center market is segmented into UPS systems, generators, transfer switches and switchgear, rack PDU, and others. Uninterrupted power supply or UPS systems accounts for the largest market share as it provides secure uptime to large data centers and provides facility-wide protection for sensitive electronics. Because electronic components require vast amounts of power, it is essential for data centers to keep their power consumption moderate. UPS systems are flourishing as a result.

Japan Data Center Market - By Type

Based on types, the Japan data center market is segmented into enterprise data centers, managed services data centers, colocation data centers, and cloud data centers. The enterprise data center segment accounts for the largest market share because of the high concentration of giant and global companies. such as Toyota, Nippon Telegraph and Telephone, Mitsubishi UFJ Financial Group, etc. However, colocation data centers are gaining huge traction as small and medium-sized businesses are shifting towards cloud computing, which proves to be cost-effective to them.

Competitive Landscape

The leading players in the Japan data center market are Digital Realty Trust Inc., Singtel Telecommunications Ltd., Equinix Inc., IBM Corporation, Telehouse, Verizon Japan Ltd, Oracle Corporation, Japan Telecommunications Corporation, Fujitsu Ltd, NTT Communications Corporation, and other prominent players.

The Japan data center market is dominated by giants and conglomerates like IBM Corporation, NTT Communications, Fujitsu Ltd., etc. However, the market is still favorable for new entrants offering efficient data center facilities. The companies significantly invest in expanding their capacity and replacing redundant technologies with advanced ones. Furthermore, the adoption of competitive strategies like mergers, acquisitions, partnerships, collaboration, etc., is also prominent in this market.

Recent Developments

• In July 2021, Mitsui & Co, a Japanese conglomerate, announced its joint venture with Canada Pension Plan Investment Board (CPP Investments). Under this joint venture, CPP investments will allocate USD 548.1 million in equity for developing hyper-scale data center facilities in greater Tokyo and Osaka.
• In May 2021, Digital Edge, a Singapore-based data center company, announced the acquisition of two data centers—ComSpace I and ComSpace II in Tokyo, Japan.

Scope of the Report

By IT Infrastructure

• Servers
• Storage
• Network

Electrical Infrastructure

• UPS Systems
• Generators
• Transfer switches and switchgears
• Rack PDU
• Others

By Type

• Enterprise Data Center
• Managed Services Data Center
• Colocation Data Centers
• Cloud Data Centers

By Mechanical Infrastructure

• Cooling Systems
• Rack
• Others

By End-User

• BFSI
• Telecom and IT
• Media and Entertainment
• E-Commerce
• Government
• Healthcare
• Others