According to data from the International Data Corporation (IDC), cloud infrastructure spending soared by 18.5% year-over-year (YoY) in Q4 2023, reaching USD 31.8 billion.
Shared cloud infrastructure, which accounts for the largest portion of the cloud market, grew by 27% in Q4 2023 alone, reflecting its prominence in the region's digital landscape.
SNS Insider also stated that the Asia Pacific shared cloud infrastructure market is poised to reach a staggering USD 784.2 billion by 2032. The market is expected to experience robust growth, with a compound annual growth rate (CAGR) of 11.7% during the forecast period of 2024 through 2032.
But what exactly is driving this surge?
Related: Hong Kong’s Public Cloud: Preparing for a Growth Surge in 2024
Cloud Accelerators
- Artificial Intelligence and High-Performance Computing
The growing interest in artificial intelligence (AI) and machine learning (ML) has also fueled the demand for robust cloud infrastructure. AI-related investments, which require high-performance computing (HPC) capabilities, are expected to continue driving cloud infrastructure spending in APAC.
IDC noted that cloud infrastructure spending is being increasingly influenced by AI-related projects, with high-performance servers and GPUs in demand to support these advanced applications. As companies leverage AI to enhance their operations, the need for cloud solutions that can handle complex computations and large datasets will only grow.
- E-Commerce and Online Retail
The e-commerce boom is one of the primary catalysts for cloud infrastructure demand in APAC. The region’s increasing internet connectivity, mobile penetration, and rapidly growing online retail ecosystem have made cloud infrastructure a necessity for businesses.
Alibaba Cloud, China’s leading provider of cloud services, has witnessed substantial growth in its e-commerce segment, capitalizing on the rising number of online shoppers across the region. As digital retail continues to expand, more businesses are turning to shared cloud solutions to handle the traffic, data storage, and computing power required for seamless transactions and customer experiences.
- Financial Technology (Fintech)
Another driving force behind the surge in shared cloud infrastructure spending is the rapid growth of the fintech sector. Mobile payment systems, digital banking services, and blockchain technologies have gained widespread adoption in APAC, creating an urgent demand for secure, scalable, and reliable cloud solutions. According to a study by IDC, the fintech sector is expected to spend USD 10 billion annually on cloud infrastructure by 2025. Given that fintech companies handle sensitive financial data, secure cloud solutions offer the necessary security, flexibility, and performance required to support their operations.
- Gaming and Digital Entertainment
The gaming industry is playing a pivotal role in the region’s cloud infrastructure growth. Cloud gaming services, which allow users to play games without requiring high-end hardware, have gained traction due to high-speed internet and the increasing number of gamers. Niko Partners reported that the APAC cloud gaming market was worth USD 3 billion in 2023, and is projected to reach over half a billion users by 2028. This growth is further amplified by the digital entertainment sector, including video streaming services like Netflix, which rely heavily on cloud infrastructure for content delivery and streaming at scale.
The increasing adoption of cloud gaming and content streaming platforms is spurring the demand for powerful and efficient cloud solutions capable of handling large amounts of data and providing a smooth, uninterrupted user experience.
- Government Initiatives and Digital Transformation Policies
Governments across the region are also playing a role in driving cloud adoption. Policies promoting digital transformation are fueling the demand for cloud services in the public sector. Singapore’s “Cloud First” policy, for example, encourages public sector agencies to adopt cloud technologies, which, in turn, stimulates the growth of the cloud market. With governments and enterprises alike prioritizing cloud-based digital solutions, the infrastructure needed to support these initiatives continues to expand.
- Hybrid- and Multi-Cloud Strategies for Flexibility
Enterprises in APAC are increasingly adopting hybrid- and multi-cloud strategies to maximize flexibility, performance, and risk mitigation. In fact, at least 90% of enterprises in the region have adopted multi-cloud strategies, allowing them to distribute workloads across different cloud platforms.
This approach not only optimizes performance but also ensures continuity in operations by reducing the risk of vendor lock-in. Leading companies like Singapore Airlines and Toyota are already benefiting from hybrid cloud setups, using a combination of public and private cloud services from providers like AWS, Microsoft Azure, and Alibaba Cloud.
Deep Dive: Asia’s Cloud and Software Sector: Facilitating Global Growth
Conclusion
The soaring demand for shared cloud infrastructure in the Asia Pacific is a reflection of the region’s rapid technological advancement and digital transformation. Factors such as the rise of e-commerce, fintech, gaming, government cloud initiatives, and AI investments are driving businesses and governments to embrace cloud solutions to stay competitive. As the cloud infrastructure market continues to evolve, shared cloud services will play a central role in supporting APAC’s economic and technological growth.
With expectations for continued double-digit growth in the coming years, the region’s cloud infrastructure landscape is set for an exciting future. Cloud adoption is no longer a luxury; it is a necessity for companies seeking to optimize their operations, scale efficiently, and stay ahead in an increasingly digital world.
Past Cloud Spending Trends:
Global Public Cloud Spending to Reach $332.3 Billion in 2021
Enterprise Spending on Cloud Surged to Almost $130 bln in 2020: Report