




Preparing for the Quantum Computing RevolutionTechnology Briefing 

TranscriptDespite the relentless advance of Moore’s law and complementary advances in software over the last halfcentury, there are still many problems that today’s computers can’t solve. Some problems simply await the next generation of semiconductors in order to become commercially important. But others will likely remain beyond the reach of classical computers forever. It is the prospect of finally solving these “classically intractable” problems which motivates potential providers and users at the dawn of the quantum computing era. Their enthusiasm is not misplaced. But, despite its enormous potential, assessing the timing and realworld impact of quantum computing has proven more difficult than for any of the other transformational technologies highlighted in our book, Ride the Wave. Fortunately, the fog is beginning to clear as breakthroughs emerge from research labs around the world. In the coming decades, Boston Consulting Group (or BCG) expects endusers of quantum computing to realize gains in the form of both cost savings and revenue opportunities of up to $850 billion annually. These gains will accrue first to firms in industries with complex simulation and optimization requirements. The way forward is likely to involve “a slow build” over the next few years, reaching a relatively modest $2 billion to $5 billion a year by 2024. But then value creation will accelerate rapidly as the technology and its commercial applications mature. The best estimates agree that the first payoffs will begin 4 or 5 years in the future and “the big quantum jackpot” probably lies over ten years out. That begs the question, “If quantum computing’s transformative value is at least five to ten years away, why are enterprises considering investments now?” The simple answer is that this is a radical technology which presents formidable rampup challenges, even for companies which already possess advanced supercomputing capabilities. Both quantum programming and the underlying "quantum tech stack" bear little resemblance to their classical counterparts, although the two technologies are likely to work quite closely together. Therefore, early adopters stand to gain expertise, visibility into technological gaps and key intellectual property that will put them at a structural advantage when quantum computing gains commercial traction. More importantly, experts believe that progress toward maturity in quantum computing will not follow a smooth continuous curve. Instead, quantum computing is likely to experience breakthroughs sporadically. Companies that have invested to integrate quantum computing into the workflow are far more likely to be in a position to capitalize on their experience and the leads they open up will be difficult for others to close. This will confer a substantial advantage in industries in which classically intractable computational problems lead to bottlenecks and missed revenue opportunities. The assessment of future business value begins with the question of what kinds of problems quantum computers can solve more efficiently than binary machines. There is no simple answer, but two indicators are the size and complexity of the calculations that need to be done. Consider drug discovery, for example. For scientists trying to design a compound that will attach itself to, and modify a target disease pathway, the critical first step is to determine the electronic structure of the molecule. But modeling the structure of a molecule of an everyday drug such as penicillin, which has 41 atoms at ground state, would require a classical computer with some 1086 bits; that involves more transistors than there are atoms in the observable universe. Therefore, such a machine is a physical impossibility. But for quantum computers, this type of simulation is well within the realm of possibility, requiring a processor with just 286 quantum bits, or qubits. The best opportunities for maximizing the impact of quantum computers seem to lie in: Materials Design, Drug Discovery, Financial Services, Computational Fluid Dynamics, Transportation and Logistics, Energy, and Meteorology. Given this trend, we offer the following forecast for your consideration. First, the full potential of quantum computing will be realized in three phases over roughly three decades. The period through 2025 will be characterized by socalled Noisy IntermediateScale Quantum devices (or NISQs), which will become increasingly capable of performing useful, discrete functions characterized by relatively high error rates. These will most likely be used to exploit quantum heuristics, somewhat analogous to conventional neural networks. Companies including IBM, Google, and Rigetti, are anticipating technological breakthroughs in error mitigation techniques which will enable NISQ devices to produce the first quantumadvantaged experimental discoveries in simulation and combinatorial optimization. Next, sometime between 2025 and 2035, quantum computers are expected to achieve socalled Broad Quantum Advantage, which will yield superior performance in a wide range of tasks which have real industrial significance. This phase will deliver a genuine quantumleap over the speed, cost and quality possible with conventional binary machines. This era will require overcoming significant technical hurdles in “error correction” and other areas, as well as continuing increases in the power and reliability of quantum processors. In preparation for this phase, companies such as Zapata Computing are betting that quantumadvantaged molecular simulation will drive not only significant cost savings but the development of better products that reach the market sooner. Ultimately, a third phase called FullScale Fault Tolerance is expected to arrive during the 2040s. Achieving fullscale fault tolerance will require makers of quantum technology to overcome additional technical constraints, including problems related to scale and stability. But once they arrive, faulttolerant quantum computers will transform a broad array of industries. They have the potential to vastly reduce trialanderror and improve automation in the specialtychemicals market, enable tailevent defensive trading and riskdriven highfrequency trading strategies in finance, and turbocharge the productivity of “in silico drug discovery,” which has major implications for personalized medicine. Second, across multiple industries, quantum computing will increase incremental operating income by up to $850 billion a year by 2050. Assuming a P/E ratio of 15, quantum computing could contribute nearly $13 trillion to stock market valuations by 2050. According to the Boston Consulting Group, this payoff will be almost evenly split between incremental annual revenue streams and recurring cost efficiencies. Third, the biggest winners will be those who identify opportunities as early as possible and prepare to exploit them as soon as the technology arrives. That begs the question, “What can companies do today to get ready?” According to BCG, a good first step is performing a diagnostic assessment to determine the potential impact of quantum computing on your industry and then, if appropriate, developing a partnership strategy for capturing the value that can be created. The first part of the diagnostic involves a selfassessment of your company’s opportunities and challenges and its use of computing resources, ideally involving people from R&D and other functions. The key questions to ask include at least these four: 1. Are we currently spending a lot of money or other resources to tackle problems using highperformance computers? If so, are these efforts yielding low impact, delayed, or piecemeal results that appear to “leave value on the table?” 2. Does the presumed difficulty of solving simulation or optimization problems prevent us from trying highperformance computing or other computational solutions? 3. Are we spending resources on inefficient trialanderror alternatives, such as wetlab experiments or physical prototyping? And, 4. Are any of the major problems we need to solve rooted in quantumadvantaged problem archetypes including combinatorial optimization, differential equations, linear algebra, or factorization? If the answer to any of these questions is yes, the next step is to perform a “quantum value diagnostic.” This starts by assessing where quantum computing could have an early or outsized impact on discrete “pain points” in particular industries. Behind each pain point, you’ll find a bottleneck for which there may be multiple solutions or a latent pool of income that can be tapped in many ways. Therefore, mapping opportunities must include solutions rooted in other technologies — such as machine learning — that may arrive on the scene sooner, at lower cost, or may be integrated more easily into existing workflows. Establishing a valuation over time for quantum computing in a given industry or for a given firm will require gathering and synthesizing expertise from a number of sources. These sources should include: Industry business leaders who can attest to the business value of addressing a given pain point; Industry technical experts who can assess the limits of current and future nonquantum solutions to each pain point; and Quantum computing experts who can confirm that quantum computers will be able to solve the problem and when. Using this methodology, BCG has sized up the impact of quantum advantage for a number of sectors, with an emphasis on early opportunities. 

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