Hyperion Research delivered its latest outlook for the quantum computing market yesterday at the Q2B22 Conference, estimating revenues for 2022 will finish around $614 million and jump to $1.2 billion in 2025 representing a 25 percent CAGR. Bob Sorensen, chief quantum analyst, Hyperion, noted it is “dangerous to project out too far” because there are too many variables. The latest Hyperion quantum market update uses the term ‘estimates’ rather than ‘forecasts,’ another sign of the uncertainty in the young QC market.

While the near-term spending and revenue expectations remain somewhat fuzzy, a clearer picture is emerging around global competition, promising end-user markets, and the likely make-up of the quantum technology provider landscape. Nagging technology issues include: uncertainty around which qubit modalities will win out; the need for advancing error mitigation/correction techniques; effective scaling up of quantum system size; and building developer-friendly tools.

Worries about a possible Quantum Winter – collapse/dramatic decline of investing in quantum computing – spawned by excessive expectations seem to be declining according to the latest Hyperion study.

These are interesting times in the quantum information sciences industry as it chases quantum advantage – the point where, at least for some applications, quantum computers will be able to outperform (cost, speed, quality of solution, etc.) classical computing systems. Think of the current quantum market as a bubbling stew with an uneven mixture of optimism, hype, wariness, and (most importantly) steady technology advances. No one knows exactly when the stew will be ready.

“This is the third annual version of this forecast, and it is becoming clear that the QC sector is indeed progressing at a steady and strong pace. However, there are a number of interesting realities revealed during the course of constructing this forecast,” Sorensen told HPCwire.

“The QC sector continues to be a bimodal collection of QC suppliers, consisting of large players armed with strong funding, established roadmaps, and a growing base of clients as well as aspiring QC suppliers, many highly dependent on investment funding, having little or no QC revenues, and sometimes even operating in stealth mode. This variety of entities looking to add their capabilities to the overall QC knowledge and capabilities base is bringing a virtual onslaught of innovation to the sector in both hardware and software,” he said.

Sorensen noted, “It is difficult to assess how far the sector can progress technologically in one year, much less five, but one thing is clear: now is the time to be engaged, be it as a QC suppler or end user. Playing catchup in this fast-moving field will be difficult.”

Hyperion plans to post its latest quantum market outlook sometime after the Q2B conference being held in Santa Clara, Calif., this week. Here are a few points excerpted from the outlook’s executive summary:

• Based on a survey of 145 respondents from 18 different countries representing 108 quantum computing suppliers, the 2022 global QC market is estimated to be worth $614 million USD in 2022.
• The QC supplier base is a diverse group of players: 7% of surveyed firms have QC revenues expected to exceed $10 million USD in 2022; 49% have QC revenues < $500K USD, and 32% have no QC revenues.
• In 2025, CSP-related QC activities will account for almost half of QC revenues: QC hardware revenues will compose ~35% of sector revenues.
• Almost 75% of surveyed firms have partnerships, primarily for access to QC hardware and software, but access to markets, verticals, and classical IT expertise also prevalent.
• For the 108 companies represented in study, ownership is 60/40 public/private; for the private firms, nearly 40% have no plans to go public.
• Top QC end user sectors: financial, QC R&D, and cybersecurity on top, but broad applicability is envisioned across at least 18 other sectors.

Perhaps not surprisingly, the Hyperion study notes the dominance of cloud-related quantum revenues continues (slide below). At least for the present, most users exploring quantum capabilities will do so via portal access rather than on-premise systems. AWS, Microsoft, and Google are representative and, of course, the major quantum system makers such as D-Wave, IBM, and Rigetti also offer their own portals for accessing their systems.

Another interesting result was respondents’ tendency to engage in partnerships – this is also not unexpected given that few (if any) quantum technology suppliers can supply all of the necessary pieces (hardware, software, middleware, dev tools, education, etc.) needed to make quantum computing useful. Even so-called full stack quantum computer companies have embraced partners (slide below).

There were no real surprises in preferred markets. Finance has long been an early target and topped respondents’ most promising end user sector list. The financial services sector is traditionally an early adopter of advanced technology that can provide any competitive edge. (See HPCwire coverage, JPMorgan Chase Bets Big on Quantum Computing.) Next on the list were QC/QIS R&D, cybersecurity, chemistry, and pharmaceuticals. Sorensen made the point that quantum computing is expected to have broad applicability.

Hyperion presented data around which quantum algorithms are expected to produce the most revenue in 2025. This is interesting in that, depending on who you talk to, there are just a few quantum algorithms that have been proven to provide decisive advantages over classical methods.

Speaking on an SC22 panel last month, Torsten Hoefler, AI authority and prominent computer science professor, ETH Zürich, said, “There is a quantum algorithm zoo but that’s really about five basic algorithms. And let me go through them. So, we have amplitude amplification. We have phase estimation, we have quantum random walks, we have quantum Fourier transform, [and] we have Hamiltonian simulation. Whenever you hear that there’s some kind of physics simulation, that is Hamiltonian simulation, basically. Whenever you hear that there’s some kind of Grover’s speed up, that’s about 90% of the quantum algorithms.”

Again, it is early in the quantum game and there is a great deal of R&D being poured into efforts to discover new quantum algorithms.

In the last year or so a few young quantum companies have gone public via the Special Purpose Acquisition (SPAC) method, including for example IonQ, Rigetti, D-Wave Systems, and Quantum Computing, Inc. Of the 68 private, 40 percent have no plans to go public according to the Hyperion study. The recent macro-economic slowdown and relatively poor performance of SPAC companies has slowed the surge of SPACs generally. It’s likely many of the start-ups still see going public or being acquired as endgames.