There is no question in our minds here at The Next Platform that quantum computing, in some fashion, will be part of the workflow for solving some of the peskiest computational problems the world can think of.
What we have had our doubts about is if anyone can ever make any money from quantum computing. It is not going to be a volume product, and it is not going to be inexpensive, either. The cost will probably be a fraction of the value of the benefits derived from quantum computing, of course, just like in the HPC simulation and modeling business, but the HPC business has not been particularly profitable over the past six decades, either.
Now, AI training and inference at scale – that is another story entirely. And we aren’t writing that one today – and on purpose because, frankly, as have AI poisoning. Maybe we all have AI poisoning at this point. Let’s take a breather together. . . .
So, apropos of nothing, we are going to talk about the quantum computing market and see if there is any consensus about what it is, how big it is, and how much it matters.
What got us to thinking about this in the first place was a report from IDC a few weeks ago that cased the worldwide quantum computing market, and we saw that the market researchers there reckoned that quantum computing drove $1.1 billion in sales in 2022 and would grow at a compound annual growth rate of 48.1 percent to reach $7.6 billion by 2027. This did not sound like a terribly huge amount of money to us – that is something on the order of the cost of eight AI training machines capable of training a GPT-4 class models or maybe twice as many exascale-class supercomputers for national HPC centers that get a huge discount thanks to national security. Which is not all that much in the crazy scheme of thing.
The irony is that because attention has now pivoted to generative AI – yes, we were not going to talk about that – IDC has actually chopped its quantum computing forecast a bit. In its last forecast for the market, done back in November 2021, it was projecting that the quantum computing market would grow from $412 million in 2021 to $8.6 billion by 2027, which is a CAGR of 50.9 percent over six years. That’s not a huge hit to growth – a couple of billion dollars in area under the curve over those years – but that revenue generated by 2027 for quantum computing is really just a drop in the bucket for such a seemingly a transformational information technology in what should be about $4 trillion in global IT spending by 2027.
We know how to calculate CAGR and worked it backwards and forwards to fill in the blanks from the data that IDC showed in its two forecasts for quantum computing revenues, and then we took what it said about where quantum computing investments would be and the end point in spending for 2027 and worked the CAGR backwards to find the investment levels were in 2021 and 2023 and fill in some guesstimates for 2020 and 2022 and plotted that data. We are not saying this is exactly what IDC would say, but it is close enough for illustrative purposes.
Basically, the level of investment in quantum computing technologies for the past several years has been 20X in 2020 to around 10X in 2021 and 2022, but will drop to a 2.2X level by 2027. That is a good curve, but it also shows you that expected revenues generated from quantum computing will not cover investment costs. This happens when a technology is nascent, and also when it is a difficult technology that is not more generally applicable. Which reminds us of the high end of HPC for the past several decades, which was really supported by the need to manage nuclear weapons and make sure they still work. Take all of that away, and maybe HPC would not be paying for itself – despite all the good that it does in fact do in the world.
Oliver Tonneau, a partner at venture firm Quanto Nation, which invests in quantum computing projects all over the world, gave a presentation at last year’s fall HPC User Forum and pulled this chart from The Quantum Insider detailing the various kinds and amounts of investments in quantum computing technologies:
And Tonneau provided this chart to show the level of investments in North America and Europe
The breakdown by quantum device type is interesting. We’re not getting into that right now. We are just counting the money.
Speaking of which, this chart from Tonneau was also fascinating:
China is looking pretty serious about quantum computing, at least based on money. The money does not always spend wisely or efficiently when a country is in catch-up mode. But, money has a way of making progress happen and markets emerge.
Here is how the folks at Hyperion Research, who used to be part of the IDC conglomerate before it was bought by a Chinese company (and was a national security risk to sell off to that company), see the quantum computing market in terms of revenues.
This seems a lot less ebullient than what IDC itself is talking about in the data above.
And here is a very interesting chart that shows quantum computing hardware companies by country and the different quantum device modalities that are under consideration by quantum computer designers:
As of last fall, there were 44 different quantum computing hardware providers and a dozen different ways to make qubits.
Heaven only knows how this will all shake out. Maybe we can ask a quantum computer to figure it out?
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