Part II: The unfolding ecosystem of business-case quantum
The incredible potential of quantum technology could push the total stakeholder value of the industry into the billions very soon. Here are some things to know:
[Part I discussed the rise of the business use-case]
Consulting giants McKinsey & Co. recently conducted a study which found that the value at stake for players involved in the quantum computing industry are already upwards of $80 billion. Since quantum computing is still a rather nascent sector, however, most of its funding comes from public sources.
According to McKinsey, “As the potential of quantum computing becomes more apparent, investments have ballooned; our research finds that 2020 alone saw about $700 million in private funding for quantum technology startups. Announced private investments for 2021 are already double this amount, bringing the total private investment in quantum computing from 2001 to 2021 to more than $3.3 billion. Announced public investments in quantum computing are even higher: nearly $30 billion to date.”
In 2021, private funding in quantum computing start-ups surpassed $1.7 billion, over double the amount raised in 2020. As its commercialization gets further traction, this number is only set to rise in the coming years.
The Hardware and Software of it
Hardware has often proved to be a significant bottleneck in the ecosystem, and challenges are set to be both structural and technical. McKinsey writes: “First, there is the matter of scaling the number of qubits in a quantum computer while achieving a sufficient level of qubit quality. Hardware also has a high barrier to entry because it requires a rare combination of capital, experience in experimental and theoretical quantum physics, and deep knowledge—especially domain knowledge of the relevant options for implementation.”
There are several quantum computing hardware platforms currently under development, with hardware roadmaps for several gate-based quantum computing players already out and clearly charting a path for the future. Whilst most concur, that not being fault-tolerant doesn’t render a quantum computing system completely unusable, experts generally question whether they can really create any business value.
The most important milestone, in this regard, is set to be the achievement of a fully error-free, fault-tolerant, and mathematically robust quantum computing system – expected from at least five major manufacturers by 2030.
Software-based start-ups are currently dominating the quantum computing landscape with industry participants currently offering personalized services and aiming to develop turnkey services in a maturing industry. “As quantum-computing software continues to develop,” notes McKinsey, “organizations will be able to upgrade their software tools and eventually use fully quantum tools.”
This quantum shift will, however, require a major realignment in the programming paradigm, i.e. the creation of a new software stack which, in turn, will require bringing global software development communities together and building an ecosystem around their offerings. In order to incentivize this, larger corporations often provide their software development kits as an open resource for all.
Having said this, however, cloud-based quantum computing services could yet become the most valuable asset of the ecosystem, creating major rewards for even those on the outside who are funding them. Most cloud computing services now offer quantum computers on their platforms, allowing users to experiment with them. McKinsey, however, notes that “since personal or mobile quantum computing is unlikely this decade, the cloud may be the main way for early users to experience the technology until the larger ecosystem matures.”
Business use-cases for quantum computing usually fit into four major archetypes: quantum linear algebra for AI and machine learning, quantum factorization, quantum simulation, and quantum optimization and search. Potentially, some of the industries that can make the most appropriate near-term usage of the technology include the pharmaceutical, automotive, finance and chemical sectors. Conservative estimates put the collective value at stake for these industries to be anything between $300 billion and $700 billion.
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