Although we put ours inside, we're surrounded by houses with external boilers. As well as conducting heat to the outdoors, they sometimes have long pipes, probably not lagged, taking a while to deliver hot water, and wasting a lot of heat getting the hot water where it needs to go.
Likely as not, though, they'll be in the traditional position for the bath water heater, right outside the bathroom, which will have a washing machine right next to it so the main water pipes. Unless some wiseguy architect has told them they can put it anywhere they like because the hot water pipes only cost 150 yen per metre. They don't realise that's also what they'll cost in wasted hot water each month.
External boilers are the norm for most of Honshu, the main island, but from the North East and certainly in the northern island, Hokkaido, putting boilers inside is common practice as well as common sense. It should be both in Nagano, which is a particularly cold area of central Japan, a good five degrees colder than the big cities of Tokyo or Nagoya. It seems people here would sooner have a tank in their house than put a boiler inside.
Electric pipe heaters are also a normal fixture here, winding around outside water pipes, and switching on when the temperature approaches freezing, which can by as many as half the nights in a year up here. More running costs. More electrical devices. More profit for the electrical companies.
One of my concerns, having the boiler inside, is to keep the tank temperature as low as possible in the summer, when our hot water needs will be much less, and the heat leaking from the boiler is going to be making the house hotter.
