It’s not exactly cheap as chips to build a quantum computer today. Indeed, they’re currently pretty pricey machines that are only being built and operated by a few key players. As quantum computing gains buzz and attention, however, and as smaller companies start getting involved, some believe quantum computing might eventually see the same commoditization as classical computers before them. Investors in the space, however, disagree.
Quantum computers are popular with the tech press owing to their potential to solve problems of incredible complexity across a plethora of industries ranging from pharmaceuticals to finance, climate change to cancer, chemical compounds to cybersecurity.
While classical computers use bits—ones and zeros—quantum computers use qubits that work on a principle of superposition, which means they can be zeros, ones, both or neither at the same time, giving rise to far more potential answers because multiple calculations are happening simultaneously with multiple inputs.
The promise of quantum computing is that once the right number of qubits has been achieved, cracking these answers could come down to a few mere hours of compute time—a clearly tantalizing proposition. The problem, though, is that qubits are still fairly unstable and even the most advanced companies in the quantum computing space are still hovering around the 50 qubit mark, whereas experts believe it will take hundreds, if not thousands of qubits to really bring quantum computing to useful fruition. McKinsey, in its “A Game Plan for Quantum Computing” report notes “many companies and businesses won’t be able to reap significant value from quantum computing for a decade or more, although a few will see gains in the next five years.”
“Since the technology is nascent, progress may be slow: our estimate is that by 2030 only 2,000 to 5,000 quantum computers will be operational. Since there are many pieces to the quantum computing puzzle, the hardware and software needed to handle the most complex problems may not exist until 2035 or beyond,” continues the report.
This hasn’t dissuaded investors or startups one, er, qubit.
“Quantum computing has the potential to change the world in ways no other computing technology has. Given its potential, I’d like to see it in as many hands as possible,” said William Hurley, co-founder of Quantum Computing startup Strangeworks. Hurley is also of the opinion that Quantum Computing will see commoditization eventually, just like classical hardware and data centers before them.
“When any revolutionary new technology is introduced it carries a premium price. As adoption spreads and more competitors enter the market prices generally fall. This is a cycle we've seen for decades. I don’t think quantum computing hardware can break this trend. These machines will start off being very costly, and end up dropping to thousands of dollars an hour, then hundreds, and then finally being sold at prices similar to those of GPUs or TPUs today.”
Indeed, it could be argued that the industry is already seeing some form of commoditization take root as ever more hardware vendors enter the market, while major players like Amazon Web Services (and soon Microsoft) fractionalize machine time while driving the prices of access to some machines virtually to under $1 a task.
Tomer Diari of Bessemer Venture Partners disagrees. “Commoditization of Quantum Computing hardware? Honestly, I do not see that happening. I think that we are going to see the exact opposite. We are going to see what is currently a very wide race among a couple dozen vendors trying to build a Quantum processor narrowing down and consolidating into the hands of perhaps three, four, five or six credible vendors working on this challenge.”
Diari believes that, at the end of the day, these few companies alone will control the technology, and the hardware stack, and will therefore be able to dictate the terms for at least the next decade or so.
Jay Gambetta of IBM agrees with Diari. “I do not see it getting commoditized in the near foreseeable future because of the dependence on the hardware,” he explained adding that it would likely never be comparable to a laptop or even a data center, and that building software for Quantum Computing was no trivial task and would require many layers of abstraction. “These are going to be specially-built machines for solving certain problems, and there’s not a lot of room for commodifying that. You’re not going to be checking your email on it.”
Investors seem to be in agreement and have been dropping large down rounds on some of the more promising quantum computing startups, as well as increasing their investments in larger, more established players in the industry.
That said, investing in quantum computing is far from a no-brainer. “It is really difficult to push an investment opportunity in a company building technology that you cannot even grasp and quantum computing is a technology that is incredibly difficult to get your mind around. It’s also very difficult to tell what sort of modality is going to prevail. What is the right way forward? How do you even Benchmark companies against each other when they are all currently developing very different technology stacks?” mused Diari. “It is almost like it must have been for semiconductor investors before semiconductors were a thing.”
While it may be tempting to invest in the software part of the stack, Diari said this approach had some problems because at the end of the day, only a handful of vendors would have the resources and ability to build the hardware, and it would be only those companies that would end up determining the entire stack, thus making investing in software layers prematurely a risky endeavor. “At the end of the day, those few companies will control the technology, they will control the stack and they are going to dictate the terms of this industry for at least the next decade or so.”
Hurley agrees that investors should be taking a long-term view on quantum computing investment. “Time is absolutely the most important thing. Most venture funds run for 10 years. If you’re at the very beginning of that quantum may not be the right investment for you. This isn’t a sprint, and it’s not a marathon, it’s an ultra-marathon and investors should be taking a long term view on any investments they make in the space,” he said.
Meanwhile, as several quantum computing players punt their offerings via the cloud, adoption and demand is set to increase, with many projecting that, at least for now, those wanting to experiment in the quantum sandbox may opt for a hybrid approach, coupling classical computing with a kick from quantum. Will that lead to commoditization down the line? Maybe or maybe not. But as Hurley points out, “commoditization would be good for consumers.”
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