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Salesforce (CRM) Bets Big on Japan, Opens 2nd Data Center

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The leading CRM platform provider, salesforce.com, Inc. (CRM - Free Report) , recently announced the opening of its second 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.

Located in Kobe, which is in the country’s Kansai region, the newly opened facility has expanded Salesforce’s Intelligent Customer Success Platform capabilities, including Sales Cloud, Service Cloud, App Cloud, Community Cloud, Analytics Cloud and more. The most interesting thing is that all of these aforementioned platforms are equipped with the company’s Einstein Artificial Intelligence (AI), launched in March this year.

Per Salesforce, Einstein enables less tech-savvy developers to build AI-powered apps quickly. "With Einstein, we are democratizing AI, enabling everyone to achieve new levels of productivity and accelerate growth, directly within the products they use every day," Alex Dayon, President and Chief Product Officer of Salesforce, said in a press release.

The recently opened facility is Salesforce’s second data center in Japan, following the first opened in Nov 2011. Japan is one of the greatest consumers of technology, so there is significant scope for growth in the country.

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. Notably, in fourth-quarter fiscal 2017, the company witnessed 30% revenue growth in Asia Pacific, on a year-over-year basis. We believe that data centers would enable Salesforce to bolster its international revenues, going forward.

The stock has outperformed the Zacks categorized Computer-Software industry in the year-to-date period. Salesforce returned 21.4% during the said period compared with the industry’s gain of 9.7%.

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 International Business Machines (IBM - Free Report) , Oracle Corp. (ORCL - Free Report) and SAP AG (SAP - Free Report) . Also, currency headwinds and increased investments could pose additional challenges.

Currently, Salesforce has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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