Japan’s SMB and mid-market companies are undergoing a rapid digital transformation. A broad range of indicators shows quite clearly that IaaS providers which balances global scalability with local requirements will play a pivotal role in enabling Japan’s SMB and mid-market companies to grow, innovate, and flourish in this new, competitive environment where AI is a “must-have” technology and security is foundational.
Cloud computing and AI adoption are accelerating as enterprises in Japan from SMB to mega conglomerates modernize their IT infrastructure to stay competitive. Japan’s domestic cloud market has been growing around 20–25% annually. In fact, the Japan cloud computing market is projected to grow from about $21.1 B in 2024 to over $72 B by 2030 (22.6% CAGR). At the same time, the AI sector is booming – spending on generative AI alone in Japan was around ¥101.6 B (≈$0.9 B) in 2024 and is expected to multiply dramatically, reaching an estimated $25.8 B by 2033 (38.8% CAGR).
For Japan’s SMBs and mid-sized companies, especially in industries like AdTech, MarTech, fintech, AI-driven applications, and gaming, these trends present both opportunities and challenges. Below, we will analyze key infrastructure trends and needs – from AI hardware to energy efficiency and security – and discuss how IaaS providers like Leaseweb can support Japan’s SMBs and mid-market companies in this new era.
IT & AI trends and needs in the Mid-market Segment
Digital growth is robust. In the past years, we have seen gradual cloud adoption among Japanese businesses. The pandemic further accelerated cloud usage with remote work and digital services. Public cloud usage in Japan is one of the largest in APAC, expanding ~18% annually and reaching an estimated $18 B market in 2023. IaaS and PaaS are now the fastest-growing cloud segments as companies move core applications to the cloud. This is especially true for sectors like retail and consumer goods firms (many of which are mid-market) that are now aggressively adopting cloud analytics and platforms to personalize services.
AI is becoming essential, not optional. For Asia-Pacific SMBs, AI has evolved into a “must-have” technology to drive efficiency and innovation. The technology sector, with an adoption rate exceeding 80%, is integrating GenAI into core offerings such as cloud application services and data centers. Over 90% of companies plan to expand their GenAI initiatives within the next two years, aiming for cost management and revenue growth.
Japan’s declining population necessitates the adoption of innovative solutions to enhance efficiency and productivity. Embracing advanced technologies, such as artificial intelligence, is essential for businesses to maintain competitiveness and drive sustainable growth in this evolving demographic landscape.
Intense compute requirements. AI and machine learning workloads (like training a model on customer data or running real-time recommendations) require substantial computing power. SMBs and startups in AI fields often lack the capital necessary to access the advanced hardware required. To fill that need, cloud providers in Japan are increasingly offering high-performance computing instances and GPU-as-a-service targeted at AI developers. This expansion of offerings will make advanced GPUs available locally to businesses of all sizes, allowing a mid-market AI startup to train large models in hours instead of weeks.
Local AI infrastructure is scaling up. Recognizing the need for accessible AI compute, Japan is also building out its domestic AI infrastructure through partnerships. NVIDIA has teamed up with Japanese cloud providers to deploy AI supercomputers and “sovereign” AI clouds in-country. SoftBank, for example, is leveraging NVIDIA technology with the goal to build Japan’s most powerful AI supercomputer and create an AI cloud service marketplace for local organizations. For an SMB doing AI-driven applications (say, a startup building a language model for Japanese legal documents), these developments mean on-demand access to world-class AI hardware within Japan’s borders. They can rent GPUs by the hour from an IaaS platform rather than investing millions in their own servers.
Energy efficiency as a strategic factor. The Japanese government has recognized that AI and data centers will significantly drive up power demand – revising forecasts to project 10–20% higher electricity generation by 2040 largely due to data centers and semiconductor chip plants. Given this macro environment of power supply constraints, IaaS providers in Japan must have energy security and energy efficiency as core strategic pillars. IaaS providers that invest in green, energy-efficient data centers can pass on savings to customers (or at least contain the cost of high-performance services) and appeal to SMBs’ growing focus on sustainability.
Optimizing price/performance. SMBs and mid-market companies often need to balance the highest performance (e.g. low latency for a fintech trading app, or fast rendering for an e-gaming studio) with budget constraints. IaaS providers can cater to this by offering a range of resource types and pricing models. In Japan, cloud vendors provide everything from low-cost VMs for dev/test, to powerful GPU instances, so SMBs pay only for what they need and use. A price/performance mindset also drives interest in hybrid cloud solutions, that offer a mix of cloud-based infrastructure by local providers and hyperscalers, to optimize performance and price.
Global Scale vs Local Compliance: Finding the Balance
One distinctive need for Japanese SMBs, especially those in digital industries, is balancing global scalability with local requirements:
Global scale. Sectors like gaming and AdTech inherently think globally. A Japanese mobile game or AdTech platform might quickly attract users across Asia or beyond. These businesses need infrastructure that can scale globally on demand – for instance, to handle a sudden surge of millions of overseas users for a viral game. Indeed, Japanese gaming companies have been early cloud adopters to reach worldwide audiences. DeNA, for example, is a mid-market gaming and internet firm, which committed to migrate all its applications to public cloud, citing the need to scale for traffic bursts and deliver a reliable experience globally. This agility and reach are crucial for AdTech/MarTech companies running international campaigns and for fintech startups that might expand into other markets.
Local data residency and compliance. At the same time, Japanese companies must comply with domestic regulations and customer expectations. Data sovereignty and compliance are top of mind. Japan has data protection laws (the APPI) and industry-specific regulations (for finance, healthcare, etc.) that may require certain data to stay on Japanese soil and/or meet local standards. Moreover, most SMBs value low-latency access and support in Japanese. IaaS providers have addressed this by investing in Japanese data centers and compliance certifications.
Mitigating Risk with Globally Distributed Infrastructure. Given Japan’s susceptibility to earthquakes, ensuring geographical redundancy is crucial for maintaining data integrity and service continuity. Infrastructure as a Service (IaaS) providers should offer multiple data centers across diverse regions to mitigate the risks associated with natural disasters.
IaaS providers that combine global presence with local trust stand to win in the SMB segment – by offering worldwide scale-out capability along with compliance assurances and on-the-ground support in Japan.
Security and regulations: Key Enablers for Japan’s Digital SMBs
In the digital era, robust security infrastructure is no longer optional – it’s foundational. For Japan’s SMBs, security expectations increasingly mirror global trends: end-to-end encryption, proactive threat detection, zero-trust architecture, and compliance-ready platforms are now baseline requirements. Yet, Japan brings its own distinct context to the conversation.
Culturally, trust and transparency from IaaS providers are critical – especially when it comes to migrating sensitive data or workloads to the cloud. In parallel, language barriers (with most technical staff operating primarily in Japanese) mean that localized support, documentation, and security tooling must be accessible to drive adoption.
Regulatory frameworks also shape the market. SMBs operating in fintech, healthtech, and other sensitive sectors must comply with local standards such as the FISC Security Guidelines, alongside global norms like ISO 27001. IaaS providers that offer pre-certified infrastructure and built-in auditability are well-positioned to support these needs – especially for companies without large security teams.
Geopolitically, Japan’s proximity to China and North Korea adds an additional layer of sensitivity around data sovereignty, surveillance risk, and national security. Japanese businesses, particularly in strategic sectors, expect tight controls over where and how data is stored and accessed. This makes regional infrastructure and clear jurisdictional boundaries key considerations.
Finally, Japan’s expanding network of local data centers – from Tokyo and Osaka to new builds in Chiba and edge zones in Sapporo—makes it increasingly feasible for SMBs to run secure, high-performance infrastructure with built-in disaster resilience. Whether it’s for regulatory compliance, security assurance, or low-latency operations, cloud infrastructure designed with Japan’s unique needs in mind is a strategic advantage.
Implications for IaaS Providers: Supporting Japan’s SMB Ambitions
All trends and needs mentioned above, indicate that IaaS providers play a pivotal role in enabling Japan’s SMB and mid-market companies’ growth and innovation. To succeed in this segment, IaaS providers should align their strategies with the specific needs outlined:
· Offer AI-ready infrastructure: Ensure that even smaller customers have easy (and affordable) access to GPUs, AI accelerators, and high-performance computing options. This might include lower-tier GPU instances, AI development sandboxes, or partnerships with AI startups.
· Prioritize energy efficiency and cost transparency: Highlight efforts in green data centers and pass on efficiency gains. Many Japanese SMBs are conscious of sustainability responsibility as well as power costs, so cloud solutions that are energy-efficient and cost-effective will appeal. Clear pricing, guidance on instance selection for optimal price/performance, and tools to monitor spending in real-time can help build trust with cost-sensitive mid-market clients.
· Provide flexible and localized solutions: IaaS providers should align to local requirements – e.g. offering contracts and support in Japanese, meeting local compliance needs out-of-the-box, and integrating with popular local software – will differentiate those truly committed to Japan’s market.
· Ensure global scalability with local compliance: Providers should continue to expand capacity in Japan (to handle growing loads) and simultaneously make it easy for Japanese SMBs to tap into global infrastructure when needed. At the same time, maintain rigorous compliance (financial, government, privacy) so that even regulated SMBs (like a robo-advisor fintech or a healthtech startups) can use the cloud with confidence that regulations are met.
· Embed robust security: Security cannot be an add-on. Cloud platforms should embed in strong zero-trust security frameworks, provide easy-to-deploy security services, and educate SMB customers on best practices.
Leaseweb: Partnering for Japan’s Digital Future
As Japan’s SMBs and mid-market companies accelerate their digital transformation, the demands on infrastructure are only growing, AI workloads, data-intensive applications, and rising security expectations require a new level of flexibility, performance, and service. From fintech startups balancing compliance and innovation to gaming companies needing global scale with low-latency performance, and martech firms using AI for real-time personalization, one thing is clear: the infrastructure powering Japan’s digital economy must be secure, cost-efficient, and configurable.
Leaseweb’s hybrid cloud platform is purpose-built to support the unique demands of SMBs and mid-market firms in Japan, with a wide range of solutions for various use cases. Leaseweb offers globally scalable and secure infrastructure, with a presence locally in Japan, tailored to meet Japan’s operational and regulatory priorities. Our solutions are widely used for AI, Gaming, AdTech, FinTech, and more in energy-efficient data centers.
We’re here to help power your next stage of growth and innovation. Visit: www.leaseweb.com contact us: sales@jp.leaseweb.com