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Going ahead with its strategy of global expansion, the CRM platform provider salesforce.com, Inc. (CRM - Analyst Report) recently announced that it intends to open a new data center in Japan. The new data center will help Salesforce to reach businesses and government agencies in the country while meeting the growing demand for cloud-based services across the Asia-Pacific region.
 
This will be Salesforce’s second data center in Japan, following the one opened in Nov 2011. The company started its international expansion in Jul 2009 with the opening of the first data center in Singapore from where it used to provide customer support across the Asia-Pacific region.
 
Japan is one of the greatest consumers of technology, so there is significant scope for growth in the country. Salesforce has decided to tap this opportunity with the 20+ investments made by it in the Japanese technology market. Additionally, the company stated that Japan's Ministry of Internal Affairs and Communications is using its Salesforce1 Platform to develop a Big Data solution for road inspections.
 
So far in fiscal 2015, Salesforce has opened two data centers: one each in Canada and the U.K. By next year, the company intends to open two more data centers in Europe — one each in France and Germany.
 
Data centers would enable Salesforce to increase its international revenues, going forward. Notably, in the third of quarter fiscal 2015, the company saw revenue growth of 29.4% in the Americas, while revenues from Europe and Asia increased 29.8% and 21.2%, respectively, on a year-over-year basis.
 
We remain encouraged by the rising number of deal wins at Salesforce and the rapid adoption of the company’s cloud-based solutions. Overall, the company’s diverse cloud offerings and significant investment in digital marketing remain positives. Strategic acquisitions and the resultant synergies are expected to support these efforts.
 
Although the company is growing reasonably in the cloud market, competition continues to loom larger from technology heavyweights like IBM (IBM - Analyst Report), Oracle Corp. (ORCL - Analyst Report) and SAP AG (SAP - Analyst Report). Currency headwinds and increased investments could pose additional challenges.
 
Currently, Salesforce has a Zacks Rank #3 (Hold).