As quantum computing outperforms classical computers on relevant tasks, industry gets more involved. Commercialization will follow scaled-up use of applications − which depends on adequate investment.
Quantum technologies − those based on the concepts of quantum physics − have three product categories in play: high-performing quantum computing devices, secure quantum communication systems, and extremely accurate quantum sensing devices. These products utilize phenomena of quantum physics (superposition, entanglement, squeezed states, and decoherence) and are expected to have multiple real-world applications across chemistry and life sciences, cryptography, aviation, logistics, financial services, and government and defense.
The buzz in quantum computing is no longer limited to academia and research labs. Investments have scaled rapidly in the last 3 years. A surge in investments has led to the emergence of more than 100 start-ups in the space; of these, more than a third already have an operational product. With their demonstrated early success, start-ups with an operational product have raised more than $4 billion.
At their current stage of development, quantum computing devices are small in scale and not practical for business uses, but quantum computing is seeing a surge of start-ups and rising investor confidence, which could result in quantum computing outperforming classical computing for some applications within a few years. By the end of this decade, quantum computing may outperform all forms of classical computing in a broad range of applications, including drug discovery, chemistry simulation, and random-number generation.
Five promising hardware technologies − superconducting qubits, trapped ions, neutral atom arrays, silicon photonics, and spin-based quantum dots − have emerged, and hardware providers have made robust projections that imply confidence in their technology’s figure (Exhibit 2). With hardware spanning five platforms, software providers have adopted two different approaches: 1) hardware-agnostic software with algorithms across different platforms to eliminate the need for gate-level programming; and 2) software for both classical and quantum computing which brings improved applications sooner without big investments in quantum computing hardware.
As the technology develops, multiple players are paving the path for commercialization (Exhibit 3). Software companies are exploring quantum algorithms with enterprises via joint research. Full-stack providers position themselves to understand end-customer needs while also working on their hardware technology. Hardware-focused companies are getting a few steps closer to end users by forging partnerships or merging with software and algorithm companies that have established relationships with enterprises. Multiple large enterprises are engaged in developing use cases with providers for identified business problems. The major cloud players (Amazon AWS, Google Cloud, and Microsoft Azure) have partnered with quantum computing hardware providers, offering their qubit systems via the cloud services.
Even as companies compete to be the first to achieve quantum advantage, the industry is expected to consolidate. Quantum providers are forming alliances with enterprises and institutes to speed up development of a scalable commercial quantum computer. Industry experts and providers forecast an upcoming wave of consolidation addressing the need to accelerate business development and customer acquisition, co-design next-generation hardware and software for specific markets, and combine resources for more economies of scale and best-in-class talent. To measure progress toward widespread adoption of quantum computing, Fernweh has developed a maturity index, based on a company’s current state of technology, the maturity of quantum players, the engagement of large enterprises in the ecosystem, and the level of investor support. According to the index, quantum computing maturity has been increasing − a trend expected to continue during this decade (Exhibit 4). Already qubits have scaled up to 100, and they are expected to reach 1,000 or more by 2025 and a million or more by 2030. We expect to see more pure-play quantum computing companies going public and greater involvement of enterprises and investors.
However, challenges exist for widespread adoption. Most concerning is the limited enterprise engagement which shows up in suppressed revenues to date of select quantum computing companies (Exhibit 5). Few Fortune 500 companies have committed spending on projects with quantum computing providers. Companies are more willing to provide internal resources for collaborative research with IP development as the primary objective, rather than developing useful applications. More robust engagements will be necessary to set off a wave of growth and observe a domino effect.
Other challenges exist in software companies and enterprises. Software companies with a hardware-agnostic approach lack focus on developing compelling apps for when hardware platforms have quantum-advantage-based applications ready. Very few enterprises are looking to invest in developing internal expertise and quantum talent; the rest will struggle to understand which parts of their businesses can benefit from quantum technologies. For quantum computing to become a widespread phenomenon with commercial applications across a broad range of sectors, all stakeholders will need to influence the shaping of the market. Quantum computing providers must be more oriented to end users and adopt a full-stack strategy with more hardware-software collaboration to develop compelling apps for practical use cases. Enterprises must commit much more spending to R&D projects with providers and invest in development of quantum skills (Exhibit 6). Governments need to facilitate establishment of international supply chains for components and invest in start-ups, not just in academia. Investors should become long-term partners to start-ups and engage in technology development.