Who, then, is participating in the multi-billion dollar quantum market?

Quantum technology is one of the least understood, yet most promising progressive technologies that will disrupt business and industry in the coming years.

Rarely has a market as small as the quantum information science market generated such a buzz. Last week, the global quantum market was estimated at $848 million in 2023 and is expected to reach about $1.5 billion in 2026, according to Hyperion Research's annual Quantum Computing (QC) Market Update, which was released at the Q2B Silicon Valley conference in Santa Clara; and Olivier Tonneau, a partner at European venture capital firm Quantonation ( Olivier Tonneau) said researchers expect quantum computing to create a market value of $850 billion by 2040.

Bob Sorensen, chief quantum analyst at Hyperion Research, presented a market update, stating, "I think positive market forecasts are reasonable, if not robust."

The Quantum Computing Ecosystem Today

Unlike previous digital innovations, quantum technologies cannot be created by the whims of a single founder. Even with the right machines and research programs funded by large institutions over the years, quantum technology will still face numerous challenges, including developing commercially viable use cases.

"Quantum technology, while still in its infancy, has made tremendous progress." Says Tono: "Early investors need to understand the science and know what is possible to assess whether the technology roadmap is reasonable and sound."

Sadly, there is still much uncertainty in the field of quantum computing, from determining what constitutes a quantum "transistor" (e.g., the preferred quantum bit model), to implementing the required error correction and scaling up the system, and ultimately, to building the library of quantum algorithms and applications that will fulfill the tantalizing promise of quantum computing.

What is uncertain is the global race among quantum believers, including governments, companies, and academia chasing this goal. For example, the United States has reauthorized the second five-year plan of the National Quantum Initiative Act in early December.

Having missed out on the semiconductor revolution, which is the foundation of the modern electronics industry, many regions (large and small) are jumping on the quantum revolution bandwagon so as not to miss out.

Currently, the quantum computing ecosystem maintains a roughly bimodal nature, with several giants and many smaller companies vying for dominance: 24 of the companies surveyed had total revenues (not just quantum revenues) of more than $10 billion, and 39 had less than $15 million. Only two companies have quant revenues over $50 million, and 66 companies have long-tail (irregular) revenues below $1 million, representing the aspiring QC market more broadly.

A relatively new perspective is a more optimistic view of deploying in-house quantum systems; both IBM and D-Wave have deployed their own systems in user facilities in the past, but not others. Just this year, both QuEra (neutral atom-based quantum bits) and IonQ (capturing ion quantum bits) announced plans to offer in-house deployed systems.

Predictably, they are planning business models for quantum integrators to assist in the deployment and integration of quantum systems into data centers.

Sorenson said, "The positive outlook for on-premise QC installations is obvious, at least to me. While there are currently many advantages to accessing QC via the cloud (pay-as-you-go options, the ability to easily switch quantum bit modes and vendors, and relatively low CAPEX requirements during the discovery phase), there will be a growing interest in using on-premises QC from QC end-user companies, who have a variety of reasons for using on-premises QC: among these are the need to protect proprietary information, accelerate tightly-integrated hybrid quantum/classical algorithms ensure 24/7 access to specific machines, and, in the case of high QC utilization, to ensure a lower cost setup than cloud access alternatives."

"That said, issues that need to be addressed include purchasing versus leasing, especially with today's rapidly evolving hardware, deciding which quantum model, architecture, and vendor to adopt, and the ability to effectively integrate on-premise QC into the existing classical HPC ecosystem."

As in previous studies, the top target sectors remain stable, despite a drop in the ranking of the financial services sector.

The attitudes of prospective QC end-users towards demand drivers are interesting, as they reflect a growing realization that the traditional HPC hardware model is in trouble.

In summary, QC users' budget expectations have also risen.

Overall, Hyperion Research and Sorensen have a positive outlook on the future of quantum computing.

He said, "There is currently a wide range of innovations in the field of quantum computing, and there are many questions about which quantum hardware and software will ultimately dominate.

However, a sure sign of a viable technology, especially one that could dramatically redefine something as far-reaching and entrenched as the traditional IT industry, is the fact that it is being explored by academics, governments and a large number of commercial entities."

"All of this ensures that every well-thought-out quantum solution has a chance to shine, but only if it proves its merits. There will be a range of companies entering the market, some will leave, some will merge, and some will move on to new opportunities. But as long as the overall scope of innovation stays on an upward trend, the future outlook for the QC industry is good."

A new consideration is the emergence of LLMs and concerns about what the impact will be of the effort and money flowing into the quantum ecosystem. For now, the quant community doesn't seem too worried. It should also be noted that there are many efforts to utilize the LLM as an educational tool for quantum computing as well as a coding aid that will allow developers to write code for quantum computers without having to master quantum-specific tools.

Jay Gambetta, IBM's vice president of quantum, commented on this, "We think the full power of using quantum computing will be powered by generative AI to simplify the burden on developers."

As with all things quantum computing, it's wise to err on the side of caution. Hyperion, for example, describes its outlook as an estimate rather than a firm prediction; there are still many moving pieces in the gradually coalescing quantum landscape puzzle.

So again, who is participating in the quant market?

Over the last year, Unitary Fund has once again conducted a community survey of various quant users to help the industry better understand who the users are, what tools they use, and the strengths and needs of the software and ecosystems they are using.

The survey covered areas such as user demographics, programming languages used, experience levels, cloud services used, OSS (open source software) development and research, communities and resources, diversity and inclusion, etc. In December, they published their latest statistics.

The majority of quantum OSS users are now researchers (53.8%), but there is also a sizable group that identifies themselves as developers (39%), students (27.5%), hobbyists (16%), and educators (12%).

These data suggest a balanced heterogeneity of interests and subgroups among quantum users and developers of OSS; nearly 45% of respondents had no background in quantum research.

The country with the highest number of participants continues to be the United States (25%), with the United Kingdom having the highest number of participants at 13%, up from 9% last year. India (10%), Canada (7%) and Germany (4.5%) rounded out the top five. EU countries accounted for about 18.

In total, 56 countries participated in the survey, indicating a continued high level of popularity and enthusiasm in this area. In terms of community inclusiveness, about 43% of respondents were between the ages of 25-34, and 23% were under the age of 25 (although less than 1% of respondents were under the age of 18).

About 91% of the respondents use quantum software, of which about 47% are users only and 53% are contributors, maintainers or owners of OSS projects. The most popular of all quantum computing cloud services remains IBM Quantum (70% of respondents are current users), though that's down 10% from last year; right behind IBM is AWS Braket (19% are current users and 19% are interested in trying it out in the next 12 months).

Quantinuum made the biggest leap in the number of current users, rising from 8% to 17.9% for third place. xanadu (16.8%) and Google (16%) rounded out the top five, with Microsoft Azure Quantum (12.3%), qBraid (9.2%) and IonQ (6.6%) also popular.

Respondents generally expressed interest in trying new services in the next 12 months, which may indicate that they have not yet found a service that suits their needs. There does not appear to have been a consolidation of services in the last two years, with ease of use, performance and documentation being the most important factors in users' decisions.

Regarding full-stack development platforms, respondents continue to say that IBM's Qiskit (including Qiskit Aer) is their most popular library (68.8%), although its popularity is down 10% year-on-year: this drop is largely due to a slight increase in the use of SDKs outside the top five.

It was closely followed by Xanadu's PennyLane (29%) and Google's Cirq (22.8%), with tket rounding out the top five with 19.8% (up 4% year-on-year). As with last year, users are particularly interested in getting started with the AWS Braket SDK in the next 12 months. Joining the AWS libraries with more than 10 percent of users are QuTiP-QIP (an affiliate program of the Unitary Fund and the only one of them not directly backed by a startup or corporation) and cuQuantum (Nvidia), while other popular libraries include Strawberry Fields, cudaQuantum , Q# (Microsoft) and Dwave's Ocean SDK.

In terms of application tools, Qiskit packages (e.g., qiskit-optimization, qiskit-machine-learning) continue to be the most popular packages, although their lead has decreased by about 10% in the last year; PennyLane's QML repository continues to be very popular; and the use of OpenQASM increased by 4% over 2022.

Other popular projects include qiskit-nature, qiskit-finance, tensorflow-quantum, Mitiq, and OpenFermion. there is still widespread interest in exploring other tools in the future, such as torchquantum, bskit, stim for quantum error correction, the PyZX compiler, Covalent, Superstaq, etc.

Regarding OSS development and research, more than 47% of respondents engaged in research defined themselves as algorithm developers, 45% as application developers, and more than a third as engaged in circuit development and optimization, software engineering, or quantum simulation/physics research. A significant number were also engaged in quantum information theory research (26%).

Other interests include quantum error mitigation (18%) and error correction (16.2%), both of which are increasing in numbers year over year. Those who chose fundamental physics, quantum bit characterization, and hardware development accounted for 13% or less. Among the most promising areas of future research, algorithm development remains the highest (55.9%), followed by error correction (49.5%), while application development, quantum simulation/physics, hardware development, circuit development and optimization, and error mitigation are all at 30% or more.

The most popular programming language is Python, which remains the same as last year at 94%. The second most popular framework remains C/C++ at 24%, and the top five are Julia, MATLAB, and Rust, in that order.

Julia had the highest year-over-year growth rate at 14.6 percent, up 4.6 percentage points. Respondents also rated Python as the most promising language, with Rust, C/C++, Julia and Q# following closely behind.

Overall, though, the value of the quantum computing market will remain high (up to millions of dollars per hardware system in some cases).

Most participants believe that quantum computing will have most users accessing hardware through the cloud within the next decade. Many quantum computers require large cooling infrastructures and space to read out electronics, so hardware vendors will provide access through public and private clouds, often with a limited number of systems installed in shared data centers.

The installed base of "in-house" quantum computers is expected to grow in the long term, but not until the technology is clearly superior to traditional hardware in solving value-creating problems.

By 2034, IDTechEx predicts that the number of users who find value in quantum computers is expected to grow significantly, increasing the need for an installed base; the quantum computer hardware market will grow even faster.

Quantum computers are attracting interest largely because of their simple "elevator pitch": exponentially shorter computation times, allowing for the solution of much more complex problems than are currently possible; everyone uses computers, so it's easy to understand the prospect of faster, more powerful computers; and people's strong interest in artificial intelligence ( AI) is a strong interest that will only expand interest in quantum computing.

Moreover, while quantum computing is best suited to solving specific problems across a wide range of industries, and while quantum computers often make headlines in science fiction and pop culture (including the recent TV show Black Mirror), the additional processing power of quantum computers is largely irrelevant to vertical markets.

As 2024 approaches, quantum computing could rapidly change the game and affect us all. Think faster drug discovery or unbreakable codes; that's the good side. But there's a bad side too:

current cybersecurity is easy to crack and the technology is still crude, often both expensive and difficult to use.

As we move from the computing world of the past into this exciting yet unpredictable quantum era, business and government leaders must be both cautious and smart. They must both embrace the giant leaps and prepare for the potential pitfalls.

Simply put, quantum computing offers a world of extraordinary possibilities, but we must learn to use it wisely.

[6]https://unitary.fund/posts/2023_survey_results/