November 2011

1. Cloud Services in Japan November 2011 Kazutaka NAKAMIZO ICT Strategy Policy Division Global ICT Strategy Bureau Ministry of Internal Affairs and Communications(MIC), JAPAN

2. Size of cloud services 1 - In 2010, the cloud services market in Japan was worth 4.5 billion U.S. dollars (363 billion yen）. - In 2015, It will increase more than six times in size to reach approximately 27.9 billion U.S. dollars (2.3 trillion yen). - The market is expected to expand by approximately 6.9 billion U.S. dollars (560 billion yen） through policy support. (billion yen) New market creation effect through policy support (New) (New) (New)

3. Benefits and challenges of cloud computing 2 benefits disadvantages/challenges <Consumer/user side> • Economical/affordable • Much volume of data/information available • Accessible anywhere • Black-box System • → data management invisible • → necessity of ensuring compliance • Centralized Management system • → much risk of hacking • →need a high level ofsecurity <Business side> • Cost reduction • Easy to launch new business • Scalability/flexibility • Business continuity

4. Potential of Cloud Computing 3 Possibilities of Cloud Computing ①　equal footing condition • Easy to start new business for small- and medium-sized companies/venture companies • Generating innovative and creative new activities ②A variety of information shared/gathered • Information useful for various fields(e.g. Medical services, education, sightseeing) • Enjoying information from internet • (e.g. music, animated film) • Optimization of energy supply (Smart Grid) • Utilization of statistical information • Generation of New Market • Innovation ③ data compiled/value-added

5. 4 ■Utilization of Cloud Services (Answers include the companies with specific plans to introduce cloud services) Large Companies 50.0% SMEs 27.0% ■Service used by the companies which have already introduced cloud services ✔Servers ------------------------ 44.9% 　　 ✔Information Sharing ------- 43.4% ✔File storage ------------------ 36.5% ✔e-mail system --------------- 33.1% ■Factors hindering introduction of cloud services ✔Cost reduction clarification ✔Security 　 ✔Operation systems ■Post evaluation on introduction of cloud services ✔satisfactory 21.6% ✔ almost satisfactory 70.7% Demand for cloud services (Survey result) Ensuring scalability Elimination of perception gap Cost reduction 47.9% Service Credibility 31.9% Agility 27.5% Scalability 24.6% 92.3% (Note) This survey was conducted in November 2009 for executives (500 companies) eligible for decision making on introduction of information systems .

6. Smart Cloud Strategy (May 2010) 5

7. Utilization Strategy 6 ■Promotion of introduction of cloud services within the government ✔Development of “Kasumigaseki Cloud” & “Local Government Cloud” ■Assist diffusion of cloud services in such areas as medical care, education and agriculture ✔Co-development of new cloud solutions in cooperation with Asian countries ■Promote development of “Smart Cloud Infrastructure” to realize more sophisticated operation of social infrastructure by utilizing cloud services ■Assist in developing “Cloud Service Usage Guidelines for Consumers” (July 2011)

8. Technology Strategy 7 ■R&D ✔Technology for collection, extraction, accumulation and modeling of a vast majority of real-time streaming data and its optimization at times when conditions change ✔Technology that enhances security and reliability ✔Technology that promotes “Green ICT” --- Green by ICT : green cloud data centers --- Green of ICT ■Standardization ✔ User-centric approach is required. “Ensuring service & technology innovation” ✔Focus should be put on: --- SLA --- Security level --- Interoperability for hybrid cloud services

9. 8 ■With the widespread use of cloud services, case storing and processing of data overseas may increase. ■Issues to be discussed at international fora （examples） ✔Jurisdiction over databases stored in other countries (eg. privacy protection act) ✔Dispute settlement mechanism ✔Countermeasures against “harmful” information 　　 ✔Possibility of government intervention with respect to private-sector data ✔Ownership of IPRs regarding data stored on a cloud data center in other countries ■ Towards consensus building ✔Cooperation between public and private sectors ✔ITU, OECD, APEC and other international fora 　　✔Bilateral consultations International Strategy

10. 9 Recent Initiatives in Japan ＜Formulation of A Guide for Protection of Cloud Service Users and Securing of Compliance＞ “Guide for Protection of Cloud Service Users and Securing of Compliance”(July, 2011) - Securing Protection of Trade Secrets and ComplianceIn Using Cloud Services -Clarifying important matters to be confirmed beforehand prior to making the contract ＜Standardization of Technical Requirements For Inter-cloud Collaboration＞ - Research and development has been promoted toward developing cloud computing technology in which plural cloud, including medium and small, can collaborate in highly reliable, high-quality, power-conserving conditions. - On the basis of the results of the research and development, a proposal was submitted to ITU-T in January, 2011, for technical requirements for functionality for collaborating across plural cloud systems. - This proposal has been officially incorporated as an agenda candidate at ITU-T. ＜Global Dialogue on Cloud Computing＞ - Concerning cloud computing, open data distribution across borders is important, and discussion with many countries is vital.

11. Japan Cloud Consortium 10 - Launched in December 2010 - An industry-academia-government collaboration mode -Lessons from the great disaster in March, and recovery Medical care Japan Cloud Consortium free membership General meeting Education Secretarial Board （Secretariat : Nippon Keidanren） More than 340 companies Matching Educational Cloud WG Agricultural Cloud WG Health / Medical cloud WG Tourism Cloud WG Fishery Cloud WG Assistance to companies Related organization NICT IPA ASPIC GICTF Assistance to residents

12. Thank you very much ! Kazutaka NAKAMIZO