Quick Quantum Quips: Quantum algorithms and infrastructure reach milestones

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Welcome to TBR’s monthly newsletter on the quantum computing market: Quick Quantum Quips (Q3). This market changes rapidly, and the hype can often distract from the realities of the actual technological developments. This newsletter will keep the community up to date on recent announcements while stripping away the hype around developments.

For more details, reach out to Stephanie Long or Geoff Woollacott to set up a time to chat.

August 2020 Developments

Like IBM did with its Selectric typewriters in the 1960s, the company is successfully weaving its quantum computing thread through myriad aspects of the greater quantum ecosystem, underpinned by strategic sponsorships and the inclusion of partners in the IBM Quantum Experience. Amazon Web Services (AWS) is pushing back on this approach by offering a vendor-agnostic view of quantum cloud computing. Academia has also thrown its hat into the ring with ongoing innovation and advancements in quantum computing. The competitive landscape of quantum computing has begun to take on the look and feel of the early classical computing world; however, the modern industry has addressed the mistakes made with classical computing, and therefore progress can be more formulaic and swift. August 2020 developments are starting to tie pieces of investments together to show a glimpse of when the post-quantum world may come, and as advancements continue the future state appears closer on the horizon than previously thought.

  1. AWS swiftly increased its presence in the quantum computing space by making its quantum computing cloud service, Braket, generally available. Underpinned by hardware from IonQ, D-Wave and Rigetti, Braket has been in testing mode for about eight months, during which time academic institutions and hand-picked customers, including Fidelity, were able to access and test the system. AWS intentionally selected the hardware vendors it partnered with because they all are underpinned by different quantum technology. AWS Braket comes to market to take on IBM and Microsoft, both of which have invested in quantum cloud services. However, a key difference is that IBM and Microsoft are also investing in their own quantum computing hardware while AWS has no current plans to do so.
  2. IBM continues to reach its targeted quantum computing goals, including successfully doubling last year’s quantum volume attainment of 32 to 64 in August. A 27-qubit system achieved this quantum volume milestone, and a mixture of hardware enhancements and software were drivers behind its success. While on its own this is not a particularly notable achievement in terms of commercial applicability, IBM’s ability to double quantum volume annually makes it clear that commercial applications are just around the corner in the quantum space, especially if the applications are leveraged in conjunction with high-performance computing. In total, IBM now has 28 quantum computers available through the IBM Quantum Experience.
  3. MIT led a weeklong summer camp for high school students on quantum computing called Qubit by Qubit. This is significant in the quantum computing realm because the pool of qualified personnel in quantum computing is so limited and the technology is still such a long game that many high school students are unaware of the career opportunities in the space. However, the quantum space needs to develop a pipeline of students who eventually major in a quantum-related field for the technology to succeed long-term. It cannot scale commercially with just a few thousand qualified personnel in the world to work with it. While COVID-19 has wreaked havoc on many aspects of everyday life, access to information has never been easier as experts are offering lectures and other activities online, providing eager learners with far more opportunities to gain knowledge. The summer camp was paired with a yearlong course if students chose to pursue it, and both programs were created in partnership with The Coding School. The summer camp was an online program that included live instruction sessions. TBR believes the summer camp focused on superconducting quantum computing because Amir Karamlou is focused on the topic as an MIT alumnus and graduate research fellow and because camp sponsor IBM conducts its own research on superconducting quantum computing. IBM was one of the technology sponsors of the program.
  4. The University of Sydney is working on developing an algorithm that can predict the noise impacting qubits in a given environment. While the project is still in the developmental phase, the researchers were able to map the noise of qubits in an experiment and believe the technology will be scalable and will enable users of quantum systems to leverage their algorithms to adapt a system to overcome the impacts of the noise. The test was done on a 14-qubit IBM system accessed through the IBM Quantum Experience.
  5. Rigetti raised $79 million in a round of Series C funding in August. The round of funding was led by Bessemer Venture Partners, which added members of its team to Rigetti’s board of directors as a result. TBR notes that Rigetti faces an uphill battle as hardware innovation is the most expensive aspect of quantum innovation and the majority of its quantum hardware competitors are major, better capitalized corporations with a division devoted to quantum hardware. Rigetti continues to raise funds through funding rounds, which increases the risk that investors will become anxious to see ROI and forgo further investment or seek faster repayment.

If you would like more detailed information around the quantum computing market, please inquire about TBR’s Quantum Computing Market Landscape, a semiannual deep dive into the quantum computing market. Our most recent version, which focused on services, was released in June. Look for our next iteration in December, focused on middleware.

2Q20 gives cloud vendors hope the worst COVID-19 impacts are over

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2Q20 was better than expected and sparks more long-term optimism

Results in 2Q20 reflect a full quarter’s worth of COVID-19 impact, and the sigh of relief from executives at leading cloud providers was almost audible. That is not to say negative impacts were not felt, though. Transactional activity was once a nice growth driver for cloud providers, laying additional revenue on top of the long-term contracts that typically provide the majority of cloud revenue. Those revenue streams have been hardest hit in the cloud space, as businesses across the board initially looked to trim expenses amid pandemic-driven disruption and financial challenges. Some long-term projects have been delayed, particularly among smaller customers that lack the same degree of financial stability their larger counterparts possess to weather challenging times. And lastly, there remains a considerable amount of uncertainty as to how the economy and customer demand will change in 2H20.

Despite these challenges, numerous positives occurred for cloud providers during 2Q20. Those positive elements not only yielded a better-than-feared performance in the quarter but also gave vendors a reason to believe there could be even more improvement in the back half of the year. One factor spurring this optimism is that, for the most part, COVID-19 has accelerated existing trends within the competitive landscape, rather than dramatically altered them. Customers are not scrapping planned cloud investments, although they may be delaying or paring them back temporarily. The largest vendors, including Amazon Web Services (AWS) (Nasdaq: AMZN) and Microsoft (Nasdaq: MSFT), saw deceleration in their revenue growth rates, but that has been occurring for years. SAP (NYSE: SAP) needed to rely on remote services to take new deployments live, but that too has been a trend for quite some time. Lastly, Oracle (NYSE: ORCL) saw a decline in cloud revenue growth and continues to trail competitors in pace of cloud growth, but that is the latest chapter in an ongoing story.

The silver lining that was consistently reported across 2Q20 earnings calls is that customer demand for cloud solutions long-term is expected to strengthen. Many vendors are looking to endear themselves to customers now by helping customers reduce expenses and by aiding in COVID-19 response. On the pricing front, vendors strategies range from pricing flexibility to discounts to assisting customers in finding efficiencies that reduce costs. To help customers respond to COVID-19, cloud vendors have developed targeted solutions and IP that support shifts in business operations, many of which are being offered free of charge or at a deep discount in the near term. These efforts may dampen some of the short-term growth for cloud solutions. However, cloud vendors have growing reason to believe they will reap the benefits of accelerated cloud investment once the economy and their customers’ businesses improve.

COVID-19 has not impacted all industries equally. Though cloud proved resilient during 1Q20, there was still trepidation about how customers in harder-hit industries like travel, entertainment and transportation would react through the remainder of 2020. Not only were results in 2Q20 stable for leading cloud vendors, there is optimism that demand for cloud technologies will remain robust through year’s end regardless of how other industries and the broader economy perform. 

IoT is helping improve supply chains, smart city infrastructure and healthcare, with growth in energy, public and manufacturing

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3Q20 vertical takeaways

Global organizations are battling supply chain issues due to COVID-19. IoT will continue to play a role in enhancing supply chains to help increase long-term resilience in the event of future pandemics or other disruptions. Automation in manufacturing and other verticals continues to be a major trend. Although some companies may have previously been reluctant to use robots due to concerns over the threat to people’s jobs, the pandemic has required businesses to find ways to maintain supply chains and productivity with less human interaction.

The healthcare vertical will continue to rapidly adopt IoT devices and solutions during the pandemic to help medical systems cope with the high volume of patients. Telehealth solutions remain in high demand, as do IoT solutions that are capable of monitoring changes in patient medical data as part of preventive medical treatments and otherwise delivering more efficient patient care.

Smart cities continue to look to IoT to increase public safety and assist with various public operations, including first responders and traffic equipment. However, smart cities increasingly need an overarching main IoT platform to better manage all the IoT sensor and camera deployments, which will help improve the real-time data analysis.

The Commercial IoT Market Landscape delivers overall market and top vertical insights, including identifying key use cases as well as trends in technology and buyer behavior. The landscape also captures the top public deals within those verticals and the lead vendors associated with them.

Deloitte’s Legal Business Services: A bridge for value creation

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TBR perspective

For decades, the legal services market has been perceived as a lawyers-only type of club with a high barrier to entry, with admission requiring many years of school, tremendous amounts of debt and passing of a bar exam. While lawyers remain at the forefront of providing legal advice, law services, like most industries, have not been spared by the advent of disruptive technologies, which have enabled a new set of contenders to enter the space of alternative legal services. Technology-enabled legal services providers such as LegalZoom and Divorceify have begun to carve a niche in the business-to-customer space over the past several years; the Big Four firms are now trying to open the door even wider in the business-to-business world, with Deloitte, in particular, looking at the big picture and trying to establish a beachhead in what could be become the next frontier for technology-enabled managed services.

Deloitte’s launch of its Legal Business Services in the U.S. in July comes as the firm has been making unorthodox investments steadily for the past several years, with technology, in TBR’s view, at the center of diversifying its portfolio offerings and increasing client stickiness. Deloitte’s core consulting value proposition, which relies on the firm’s trust across the C-Suite buyer, will again be tested as enterprise buyers seek optimization of the last piece of the back office, the legal department. Utilizing management consulting and advisory services at the front end, enabled by the company’s Chief Legal Office program, Deloitte’s specialized expertise targets chief compliance, chief legal officers, and heads of legal operations who are grappling with everyday challenges including cost savings and customer experience.

As Deloitte evolves its brand to become a solutions partner, the firm’s investments in Legal Business Services not only add another tool in the consultant’s tool box but also could help the firm build a backup bridge to maintain access and relationships with clients seeking compliance advice. These steps taken now to expand business could be strategically critical to the overall firm in the future.      

In a recent discussion with Deloitte Discovery practice and Legal Business Services practice Lead Bryan Foster and Deloitte Tax LLP’s Legal Business Services Principal Mark Ross, Technology Business Research Inc. (TBR) gained deeper insights into the firm’s recently launched Legal Business Services practice in the U.S., which TBR believes could help Deloitte increase client stickiness and capture technology-enabled managed services opportunities.

Niche enterprise edge vendors disrupt the enterprise edge compute market

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New and reformatted use cases have emerged at the edge that help companies meet safety requirements and allow employees to return to the physical workplace. Longer-term solutions that will help dictate how we live in the new normal will rely more heavily on edge technology, further increasing desire for the already high-demand enterprise edge compute infrastructure and related applications. Additional use cases will emerge at the edge as companies worldwide adjust their operations to ensure they are meeting safety guidelines, which will require increased visibility of their customers and employees. To meet the varied demands of new use cases and extend existing ones, enterprise and niche edge players are building out a strategy rooted in innovation and automation and are increasingly looking to build and sustain strategic partnerships to accelerate time-to-market.

Join Nicole Catchpole and Stephanie Long for a discussion on how COVID-19 has created new opportunities at the already thriving enterprise edge. The analysts will also discuss niche players and emerging startups that have relevant offerings that address companies’ needs during the pandemic.

Don’t miss:

  • Emerging enterprise edge use cases, including those related to COVID-19, and customer examples
  • Niche and startup players with differentiated edge compute offerings
  • The increasing relevance of strategic partnerships

Atos gains AI consulting expertise through the Miner & Kasch acquisition to enable digital transformations

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Miner & Kasch’s deep AI expertise in North America helps Atos extend global reach and scale

According to Atos SVP of Big Data & Security Jerome Sandrini, Miner & Kasch’s appeal included raw talent — “pure data scientists, real PhDs, not citizen data scientists” — and reusable components, particularly assets that will work with Atos’ Edge servers. Listening to Miner & Kasch co-founder Niels Kasch walk through several use cases, TBR understood both of Sandrini’s points, as the technical expertise was matched with examples of applying distinct approaches and solutions across multiple industries. Sandrini also noted Atos’ commitment to ensuring Miner & Kasch is integrated fully into the larger Atos but not diluted, retaining its agility and culture. Miner & Kasch resources were merged with resources gained from the zData acquisition in 2017. The Miner & Kasch acquisition accelerates Atos’ Data Science as a Service offering and improves the company’s ability to deploy edge and next-generation data science platforms for industry solutions.

Since the beginning of 2019, Atos has been following a bolt-on acquisitions approach to gain capabilities and intellectual property and support its expansion in areas with growth potential. In 2019 Atos made two purchases with 100 employees each, IDnomic in identity and access management and X-perion Consulting in energy and utilities consulting. In 2020 Atos announced six acquisitions, three in the U.S. and three in France, ranging from 50 to 800 employees, targeting new areas of expansion for Atos and offering small-scale capabilities with IP: Maven Wave (U.S.) in Google Cloud; Miner & Kasch (U.S.) in AI and data science; Paladion (U.S.) in AI-driven cybersecurity and risk analytics; AliA Consulting (France) for SAP S/4 HANA; EcoAct (France) in decarbonization; and digital.security (France) in cybersecurity services.

In April Atos announced the acquisition of Maryland-based data analytics consulting boutique Miner & Kasch, folding it into Atos’ zData business group to create a team of more than 100 AI consultants. TBR spoke with Miner & Kasch co-founders Donald Miner and Niels Kasch, zData CEO Dan Feldhusen, and Atos SVP of Big Data & Security Jerome Sandrini about Atos’ strategy behind the acquisition and expectations for the zData business group heading into 2021.

Global trade and maritime ports: How EY tackles both with digital transformation and data

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Bringing expertise, technology and experience to the business of running a port  

TBR has covered EY extensively, reporting on the firm’s evolution in both technology and global operations, most recently in a special report that noted, “EY has rapidly evolved its technology consulting practice and its overall value to clients around emerging technologies and is now addressing scale, standardization of quality across the globe, and sustained investments in innovation and the ecosystem through its common global strategy and practice architecture.” The wide-ranging discussion with Jonathan Beard and his colleagues reinforced that assessment, particularly in the way EY emphasized its opportunity to apply its industry markets expertise and technology capabilities to an ecosystem in need of rapid digital transformation.

The firm, according to James Wainwright, has been building on its NextWave Global Trade Initiative with its own assets and intellectual property, harnessed to long-developed understandings of the maritime industry, and pulling together its global technology consulting expertise. While the Global Trade Initiative is still a work in progress, EY has clearly made a commitment to play to its own strengths, move rapidly in an evolving market, and become a critical, trusted link within the broader ecosystem. Heading into the latter half of what has been a horrible year for everyone, EY’s specific challenges will reflect the headwinds across the maritime port and supply chain markets overall: coping with the pandemic, growing in a turbulent global macroeconomic climate, and investing in the right technology to solve the knottiest business problems.

To set the stage, Port Optimization solution Lead Wouter van Groenestijn noted that there exist “many suboptimalities in ports” and the operators, port authorities and others in the ecosystem collect vast amounts of data but very rarely tap into it. As an example, EY cited workforce planning — ensuring the right people are on location exactly when needed, based on a ship’s expected arrival — can be enhanced through data management, AI and analytics, provided the data is collected and used properly. With skills and experience combining vast and constantly evolving data sets, EY can play a role in addressing specific run-the-port problems, which span multiple ecosystem players, such as operators, shippers, regulators and freight-forwarding companies, and have a direct impact on operations and profitability.

In addition to providing expertise around data, EY serves as a useful ecosystem hub as it is a trusted partner to all the stakeholders within a port. TBR has heard multiple variations on this idea that maritime ports contain vast complexities with overlapping interests, jurisdictions and business models, reinforcing the need for a neutral party to handle shared concerns such as data. Optimizing that data then comes from, in EY’s estimation, knowing what to look for, which only comes through experience working with maritime port clients and their ecosystem clients and partners.

In mid-July TBR continued looking at the digital transformation parallels between maritime ports and smart cities by speaking with a team from EY’s Global Trade Initiative about the firm’s efforts with port authorities and broader port ecosystems. Jonathan Beard, partner, Strategy and Transactions, Hong Kong; James Wainwright, senior manager, Financial Services Advisory, London; Wouter van Groenestijn, associate partner, Strategy and Transactions, Singapore; and Lynn Dike, associate director, Brand, Marketing and Communications, London, described EY’s initiatives and solutions in the context of a wildly uncertain market. The following reflects that discussion and builds on TBR’s previous reporting on this space.

CSPs are advancing network transformation initiatives to realize cost savings and capitalize on digital era use cases

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Network transformation positions CSPs to support advanced use cases

As communication service providers (CSPs) are transforming into digital service providers they are transitioning their networks to a virtualized, container- and microservices-based, cloud-native architecture. This cloud-centric network architecture will enable CSPs to generate value from new technologies, such as 5G and edge computing, and adopt next-generation network operations based on data as well as AI and machine learning for continuous, closed-loop automation.

This new architecture will also enable CSPs to take advantage of network slicing and low latency to more effectively support use cases in areas such as autonomous transportation, video analytics, robotic process automation, AR/VR solutions, advanced healthcare applications and cloud-based gaming.

The NFV/SDN Telecom Market Landscape includes key findings, market size, customer and geographic adoption, operator and vendor positioning and strategies, and acquisition and alliance strategies and opportunities.

Unprecedented levels of government support will help CSPs deploy 5G more quickly and broadly than originally anticipated

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Communication service provider (CSP) spend on 5G infrastructure will scale faster and peak higher than originally anticipated due to the vast amount of support by governments in a range of countries, including but not limited to China, the U.S., the U.K., Japan, South Korea and Singapore. As a result, typical historical deployment curves for cellular technologies will not apply to the 5G market, which is now expected to be widely deployed globally by the middle of this decade instead of in the later years of the decade.

The pull forward and broadening of infrastructure investment are primarily due to attempts by leading countries to support their economies amid the COVID-19 crisis as well as to keep pace with China’s aggressive and broad investment initiative for competitive reasons. Over the past 12 months, 5G has become a highly political issue, and the unprecedented government involvement and funding are being justified on national security, economic competitiveness and public health grounds.

TBR’s 5G Telecom Market Landscape includes key findings, market size, customer adoption, operator positioning and strategies, geographic adoption, vendor positioning and strategies, and acquisition and alliance strategies and opportunities.

Vendors enhance core competencies with strategic purchases and AI investment to address IT challenges in the analytics services market

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All vendors tracked in TBR’s Digital Transformation: Analytics Professional Services Benchmark except Oracle expanded their analytics services revenue in 1Q20, albeit at a slower pace from the previous year, highlighting that optimizing IT operations — through the use of analytics — is becoming table stakes for buyers.

Accenture took over the No. 1 spot from IBM Services in revenue size in 1Q20, something TBR saw coming a couple of years ago. In TBR’s 1Q18 A&I Professional Services Benchmark, we wrote, “In 1Q14, when TBR launched the inaugural edition of this benchmark, Accenture’s quarterly A&I services revenue was just over half the volume of IBM’s. In 1Q18 Accenture was nearly 85% of IBM’s size in overall A&I services revenue, surpassing Big Blue in three service lines and one region. Though IBM made significant strides to reshape its services organization over the last four years, those efforts came too late to protect its market share.”

TBR’s Digital Transformation: Analytics Professional Services Benchmark addresses changes in leading digital transformation vendors’ strategies and performances as well as their investments and go-to-market positions as it relates to the ever-evolving analytics services market. The report includes use cases and analysis of IT services’ and consultancies’ management of technology partnerships as well as highlights region-specific market trends to benchmark key service line, regional and operational data across 20 leading analytics services vendors.