For enterprise users in the West, quantum computing will see a five-way battle for dominance among established Big Tech providers, with the cloud being the main platform for accessing a new generation of business services. That’s the view of a new report from technology investment analyst firm CB Insights.
According to the 73-page document, The Big Tech in Quantum Report, Google, Microsoft, IBM, Amazon, and Intel are the five giants that merit CXOs’ attention, in terms of players that already provide classical hardware, platforms, or services to the enterprise. Qubit counts will rise as the five vie for quantum dominance, with more and more demonstrations of enterprise applications this decade.
The likes of Baidu, Alibaba, and others will provide China’s counterpoint to US dominance – not to mention a focus for geopolitical fears and debates, particularly when it comes to cybersecurity.
Quantum communications and security are among the key R&D areas worldwide, leading to ultra-high-speed, secure channels on the one hand, but also threats to classical systems and security on the other. The irony, therefore, is that leadership in quantum’s many upsides also means leadership in tackling its destabilising elements.
In the West, question marks remain about the quantum strategies of other Big Tech players, such as Facebook and Apple – major platforms, but not significant presences in the infrastructures of enterprise users.
Oracle, meanwhile, appears to see quantum processors’ relationship to classical ones as being analogous to CPUs’ relationship with GPUs: both can run under the hood, while being optimised for different tasks. That’s the pragmatic view. This is the same company that was accused of spending years dismissing the cloud as vapourware, only to then execute highly effectively on a ‘cloud domination’ strategy through a combo of ‘homegrown tech’ and acquisition.
The runners and riders
So, what are the so-called ‘Big Five’ up to, in CB Insights’ view? IBM is perhaps the dark horse in the quantum field, suggests the report. While it may lack the day-to-day enterprise mindshare of Google/Alphabet, Microsoft, and Amazon Web Services (AWS), it is the holder of by far the most quantum patents, with Microsoft the runner-up.
IBM has an ambitious roadmap to scale the power of the hardware in which it has been heavily investing, with the aim of reaching quantum advantage first – the point at which quantum circuits can reliably outperform classical computers.
In November 2021, IBM launched its 127-qubit Eagle processor, a significant move in that it signifies the threshold beyond which quantum circuits can no longer be meaningfully simulated on classical devices (according to IBM’s own blurb).
Big Blue was a pioneer of providing quantum computing in the cloud to early-stage developers and programmers, launching a service as far back as 2016. It is also an investor in blue-tick UK player Cambridge Quantum, which merged with Honeywell’s quantum business last summer.
As a cloud-born giant, Google is building its own commercially useful quantum hardware – it is aiming for a soundbite one million qubits by the end of this decade – and (predictably) was the first company to claim quantum supremacy. But its key focus is really on developing quantum AI, which it plans to spin throughout its product line.
Parent company Alphabet also has teams working on a variety of quantum technologies, including sensors, post-quantum cryptography, and integrating quantum devices with distributed classical networks. Waymo (driverless vehicles) and AI behemoth DeepMind are other parts of the business that would benefit from quantum advances.
Alongside Amazon, Hewlett Packard, Samsung, and Airbus, Google is also a significant investor in ion trap specialist, IonQ, one of the few start-ups apart from Cambridge Quantum to have Big Tech investment onboard.
Microsoft’s approach to this nascent market is subtly different and, arguably, more pragmatic. Redmond is spreading its bets by offering access to quantum computers from different makers and research teams via Azure. Think of it as an enterprise mall full of smaller concessions.
However, the company is also pursuing its own hardware, while in July last year its venture capital arm contributed to a $450 million investment round in Palo Alto-based PsiQuantum, the photonics start-up that is focused on developing new vertical and horizontal business applications.
PsiQuantum is edging towards being the first unicorn in this space, with total disclosed investments to date of $729 million.
Amazon has also partnered with start-ups to launch quantum services on AWS, while – like its rivals – developing its own advanced hardware. As the cloud platform that underpins a myriad of smaller enterprises, Amazon’s focus must be on developing useful applications. Indeed, in CB Insights’ assessment, AWS now sees quantum computing as the key to its platform’s future – a bold and probably overstated claim.
However, for all the players, developing reliable, error-free, low-noise hardware must come first; only then can viable enterprise services follow. Getting there will be a long haul, which demands patient capital.
Meanwhile, Intel’s focus is unsurprisingly on developing its own quantum processors, which it aims to scale as rapidly as possible, albeit using an end-to-end supply chain developed for semiconductors.
However, like Google and Microsoft, Intel also has a strong presence in post-quantum cryptography, notes CB Insights. In this sense, it wants to be both poacher and gamekeeper by developing encryption methods that protect against the looming threat from quantum computers.
The five Big Tech quantum players in the US are each driven by three things, says the report: fear of missing out (FOMO); the opportunity to leapfrog into new markets; and future-proofing – or defending – key markets with (and against) quantum innovations:
Any company that can quickly scale up quantum computing will find itself with a dramatic advantage across far-reaching areas like optimisation, simulation, and AI. While formidable challenges remain, Big Tech players don’t want to miss out.
Powerful quantum computers could be game-changing for industries like banking, drug discovery, logistics, and many more. Becoming a quantum computing leader could allow Big Tech giants to compete in new markets and become vital partners for an array of incumbents.
If Big Tech companies lag on quantum, then quantum computer-equipped rivals could weaken big tech’s grip on areas like AI, e-commerce, cloud services, and more. Even though it is early days, Big Tech companies reckon that the risk of falling behind on quantum is greater than the potential for wasted efforts.
Management consultancy BCG estimates that quantum optimization applications in finance, logistics, and aerospace alone could generate up to $220 billion in annual revenues once the technology matures.
Investment is certainly growing as qubit numbers rise. In 2016 (at the birth of enterprise quantum services in the cloud), there were 16 deals worth a total of $67 million. In 2021, there were 63 worth just under $1 billion.
A useful snapshot of the sector at (ironically) macro scale. But as ever with quantum innovations, the inherent problems are noise and error correction – both within quantum circuits themselves, and within the industry, given the bold claims and counter claims that characterise this sector.
So will Big Tech win against innovative start-ups and university spinouts, such as those that underpin the likes of the UK’s own ambitions in this space? Size and bank balance aren’t everything when it comes to advances in technology, of course. But being able to step in and buy the innovators is – as Google did with DeepMind in Artificial Intelligence.
Until countries such as the UK can back technology start-ups with major homegrown investment, corporations that have market caps greater than most nations’ GDP will always dominate.