A Deep Dive into Future Quantum Computing Markets

By Philipp Gerbert, Jan-Frederik Jerratsch and Frank Ruess

The almost clock-like doubling of computing power every two years, which came to be known as Moore’s Law, has fueled the high-tech industry, as well as IT and digitalization across all industries for the past 60 years. The mainly transistor-density-based rhythm is over, and ever-more ingenious methods are required to keep the improvement cycle running.

For several decades, computer scientists have promised that quantum computing would come to the rescue. By leveraging the coherence properties of a multi-qubit quantum state, a powerful “group calculation” could in some cases exponentially speed up processes and render many hard computational problems tractable. (If you want to understand some of the basics better, check this out IS YOUR MIND QUANTUM READY - BCG QUANTUM COMPUTING QUIZ).

In a recent extensive overview of the field—describing applications, key players, investments, and IP, as well as an assessment of the various hardware and algorithmic approaches—we have shown that the next few years promise to be highly interesting (THE NEXT DECADE IN QUANTUM COMPUTING – AND HOW TO PLAY). The new systems in this Noisy Intermediate State Quantum (NISQ) period are still error-prone, but so-called variational algorithmic approaches have the potential to tackle the first important problems. Indeed, we expect the first “quantum advantage” demonstration to still happen in 2019.

Notwithstanding the general hype, quantum computing will be most relevant for specific sets of problems. In a recent study (WHERE WILL QUANTUM COMPUTERS CREATE VALUE AND WHEN) our colleagues dissected these specific applications from a computational perspective and then analyzed the pathways in detail for the four most promising industries.

Below is the overview of this perspective, where quantum computing would be most useful, and what sample application areas would be.

It seems fair to claim that 95% of today’s quantum computing algorithms tackle one of the areas above, so it is time to start identifying opportunities in your own company.

Over the next 5-10 years (NISQ period) the most promising industries seem to be Material Sciences, Pharma, Finance and Computational Fluid Dynamics. During this period, The potential value creation of these segments is projected to collectively reach $1-2 billion, which would amount to around 40% of the total $2-5 billion in value created for end users of the technology (value captured by technology providers such as IBM, Google, Rigetti, Microsoft, Alibaba, Honeywell, IONQ and others will depend on the willingness-to-pay of these end users)

• In Material Sciences the promise is for molecules within the order of 100 atoms to become computationally tractable. This includes an enormous amount of catalysts that could drastically change the economics of many industrial processes, such as the production of fertilizers, and product performance, for instance, of batteries. The overall addressable NISQ market is around $400-600 million.
• In Pharma, the start will be slower, as the simulation for ”established” small molecules is already quite mature. During the NISQ period the market is estimated at $200-500 million. As in silico simulation and eventually the use of more complex and more stable molecules gain speed, they will ultimately address a mega-market.
• Finance has historically soaked up computational innovation like a sponge, and QC is no different. As soon as NISQ machines scale, quantum computing could quickly become a de facto standard component in portfolio optimization and arbitrage strategies, also estimated at $ 200-500 million.
• And finally in Computational Fluid Dynamics— simulating flows of air and liquids for planes, cars, turbines and more—improved meshing alone could reduce the need for wind tunnels and lead to more energy efficient solutions, a $200-700 million market in the NISQ period.

Of course, this is only the beginning. On the way toward robust quantum computing, solving quantum error correction is the Holy Grail and would finally open the gates for many more applications in the post-NISQ period, described and assessed in detail in this report. Timing is hard to predict. Quantum computing is bound to initially advance in irregular leaps rather than in a clock-like fashion. If and when error correction is achieved, however, progress and the sequencing of applications will become much more predictable. The analyses underlying the report are quantified in detail, and the essentials are also summarized. At the end of such an exponential growth period, the collective markets could then start approaching $1.000 billion ($1 trillion) – and the promise of quantum computing would be fulfilled.

The future leaders in quantum computing are bound to emerge over the next several years. Many companies are trying to assess what role they can play and what approach fits their specific risk/return profile. The report is an essential guide to their decision-making.