Quick Quantum Quips: August quantum developments advance multiple rival architectures, with education and standards rising in importance

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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 keeps the community up to date on recent announcements while stripping away the hype around developments.

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

August Developments

The overall quantum market has seen an uptick in announcements and a trickle of introductory articles hitting mainstream media. On the one hand, quantum articles delivered to a broader audience can exacerbate the so-called hype cycle, but on the other hand the articles highlight that ongoing efforts in scientific discovery across the broader quantum landscape are beginning to show promise for delivering commercial-grade quantum computing infrastructure for businesses, academia and governments to use for advantage rather than just for exploration and experimentation with quantum logical constructs. For example, both Honeywell/Cambridge Quantum Computing (CQC) and Q-Ctrl released research signaling improvements in quantum error correction (QEC), which is crucial to the development of fault-tolerant quantum systems — the aspirational objective — of all quantum systems vendors today. In turn, IonQ announced a reconfigurable multicore quantum architecture (RMQA) that it believes has the potential to increase qubit counts into the triple digits on a single chip. Xanadu made announcements regarding advancements in photonic — or light-based — quantum computing in a form factor the size of a penny that could one day eclipse the early advantage of the superconducting and trapped ion architectures.

IBM hosted a two-day virtual event for academia to discuss the curricula necessary to provide native quantum credentials to those entering the workforce at the dawn of this era in the ever-evolving technology sector. The Hudson Institute’s Quantum Alliance Initiative (QAI) added another partner, Quantum eMotion, to its efforts to create global standards for quantum communications that will be necessary for the scaled utilization of this game-changing compute technology.

Honeywell/CQC and Q-CTRL: Both entities promoted advancements in QEC in an effort to optimize qubit computational accuracy. QEC is a critical tool many quantum system vendors, such as IBM, are investing considerable time and energy in trying to perfect, as it is necessary to achieve fault-tolerant quantum that can address not only noise on stored quantum information but also faulty quantum gates, quantum preparation and measurements. QEC is at the heart of quantum advantages in computation by delivering precise outputs with lower time and cost input. The importance of QEC also indicates that a broad quantum ecosystem is necessary to make the computational potential of quantum a reality.

IonQ made a major announcement in late August about a patent-pending chip design offering tighter ion confinement, improved ion lifetime and reduced ion heating that relies on IonQ’s technological platform, which is called Evaporated Glass Traps (EGTs). The architecture is expected to allow IonQ to scale qubit count on its quantum chips without suffering qubit fidelity performance losses.

Xanadu and imec: Xanadu, a Canada-based quantum computing company, collaborated with Belgium-based fabricator imec around photonic or light computing and has moved to the point of early production. The partnership illustrates the need for a broad ecosystem of quantum adjacent businesses capable of taking lab innovations into scaled production.

IBM Quantum Educators Summit: IBM sponsored a virtual summit Aug. 3-4 aimed at high school and undergraduate educators seeking to learn how to incorporate foundational quantum computing elements into their courses. Of interest to TBR in auditing the conference was the premise put forth by the speakers that the world’s quantum experts are actually quantum immigrants, having come to the field from other academic tracks such as physics and mathematics. As such, the fundamental impetus for the summit was to assist academia in assembling the proper curricula to prepare native quantum professionals for students interested in the growing number of quantum — and quantum-adjacent — professional tracks that will arise as the leading innovators develop fault-tolerant quantum.

Quantum eMotion: Montreal-based Quantum eMotion announced it joined the Hudson Institute’s QAI, which is an international consortium of companies, institutions and academics. QAI seeks to establish policies that will serve as guardrails for quantum as the technology emerges into a mature and mission-critical element of global business and research. A primary focus for the organization is looking at the impact the domain will have on national security and on the economy and how QAI can foster global standards for securing quantum communication. With individual nation states and regions all vying to assure a quantum gravity center and the high value jobs that will come with it, the establishment of these standard protocols has been both a delicate and sclerotic process.

Webscales in the digital ecosystem: Insights from TBR’s Telecom team

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Webscales encroach on telecom sector to realize value of digital economy

Trillions of dollars in economic value will be created globally from 5G, edge computing, AI and other new technologies during this decade, and TBR believes the world’s largest webscales (aka hyperscalers) will capture an outsized portion of this opportunity.

Webscales are building end-to-end digital ecosystems that transcend all aspects of people’s lives and deliver business transformation. As part of this overarching strategy, webscales are increasingly encroaching on the telecom domain so they can unlock value from the nexus of distributed computing and intelligent connectivity. This trend has significant, disruptive implications for telcos and ICT vendors.

Join Principal Analyst Chris Antlitz Wednesday, Sept. 22, 2021, at 1 p.m. EDT/10 a.m. PDT for an in-depth, exclusive review of TBR’s most recent Webscale Digital Ecosystem Market Landscape,during which he will discuss how and why webscales are disrupting the telecom industry and what this means for incumbent operators and vendors.

TBR’s Webscale Digital Ecosystem Market Landscape tracks how and why the world’s largest webscales are disrupting industries to unlock economic value in the digital era, with specific focus on the disruption of the telecom industry. The report focuses on the nine largest webscales: Alibaba, Alphabet (Google), Amazon, Apple, Baidu, Facebook, Microsoft, Rakuten and Tencent.

Don’t miss:

  • The overarching growth strategy of webscales
  • Why webscales need to disrupt the telecom industry
  • How webscales are disrupting the telecom industry
  • What this means for incumbent operators and vendors that play in the telecom sector

Register today to reserve your space

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

WEBINAR FAQS

Webscales are simultaneously moving into multiple trillion-dollar industries, including telecom

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Webscales need to enter and disrupt trillion-dollar industries to maintain growth trajectories and sustain stock valuations

Transportation (e.g., connected vehicles), logistics, financial services, healthcare, telecom and other sectors each represent at least a trillion dollars in economic value globally, and webscales are targeting each of these industries for disruption.

Webscales need to rapidly scale their presence in these industries to add billions of dollars in top-line revenue to their respective income statements each year to sustain their stock valuations.

Telecom is a unique market to disrupt because it represents around $2 trillion in current economic value and provides foundational infrastructure to drive disruptive initiatives across other industries. Intelligent connectivity transcends all industries in a digital economy and is the foundational medium for data transmission and the conveyance of cyber-physical exchange that fuels digital transformation. Moves by Microsoft to acquire Affirmed Networks and Metaswitch underscore the strategic imperative for webscales to disrupt the telecom sector.

Webscales will ensure the Fourth Industrial Revolution becomes a reality

The Big Nine webscales are investing over $300 billion annually collectively (R&D and capex), and this amount is growing rapidly, on world-changing endeavors, such as building virtual worlds, truly autonomous vehicles, conversational voice AI, quantum computers, and frictionless, intelligent and ubiquitous connectivity. These initiatives will push the rollout of ICT infrastructure at scale and get governments and businesses aligned to ensure they are digitally transforming.

Webscales are standardizing industrial digitalization to bring enterprises into their ecosystems, and over time the webscales will enhance and broaden the capabilities they offer to enterprises en route to full realization of Industry 4.0.

TBR believes the world’s largest webscales will likely own and control key platforms and ecosystems pertaining to the realization of Industry 4.0 and will garner an outsized portion of the value that is created from the digital economy.

The next major device category is AR/VR

AR/VR represents a relatively new, trillion-dollar market category that could eclipse the market impact smartphones have had on the global economy since the inception of the iPhone in 2007. Microsoft’s up to 10-year, $21.9 billion contract with the U.S. Army for HoloLens-based solutions exemplifies the potential of this market.

All of the Big Nine webscales are investing in AR and VR devices and/or applications as they aim to capitalize on this market.

As with the smartphone era, AR/VR will put enormous requirements on global networks as uptake of new devices occurs. Webscales are learning from prior issues and are actively exploring connectivity options to mitigate the high bandwidth/low latency requirements of AR/VR devices to ensure user experience is acceptable.

TBR has revamped its original Webscale ICT Market Landscape starting with the 1H21 publication. As part of this revamp, the report name has been changed to Webscale Digital Ecosystem Market Landscape. Though this report still covers the end-to-end digital ecosystem endeavors of the major webscales at a holistic level, the content of this report will focus on webscales’ disruption of the telecom industry. The 1H21 publication of the report specifically focuses on webscales’ disruption of the network intelligence-layer technologies domain. TBR’s next edition, expected to publish in January 2022, will focus on the connectivity infrastructure and connectivity business model disruption endeavors of the webscales and what this means for telcos and vendors.

How ecosystems turn cloud technology into solutions

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As enterprise customers’ cloud deployments mature, they are exploring a greater variety of technology-enabled business processes. This trend presents a substantiative opportunity for cloud platform contenders but demands new ways of working with ecosystem partners. While independent software vendors (ISVs) add depth and breadth to portfolios, bringing solutions to market requires greater involvement from SI and consulting entities that understand the processes customers are aiming to modernize, particularly considering the resurgence of industry-led solutions and services.

In this exclusive TBR webinar, Principal Analyst Allan Krans and Senior Analyst Evan Woollacott will discuss the evolving ecosystem among cloud platforms, ISVs and professional services firms as well as best practices developing in the cloud space.

Don’t miss:

  • Review of cloud platform latest portfolio initiatives
  • The role of ISVs in platform programs, and how these programs are encouraging partner buy-in
  • Professional services and consulting firms acting as the tip of the spear to vendor go to market

Register today to reserve your space

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Deconstructing COVID-19’s impact on IT services and manufacturing

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For IT services vendors working with manufacturers, resiliency, business continuity, security and digitalization spark new revenue growth

During 2020 the COVID-19 pandemic negatively affected IT services vendors’ revenue growth in industrial solutions, manufacturing and automotive due to country lockdowns across the globe that caused major supply chain and production disruptions. Enterprises in the sector weathered the worst of the pandemic at the beginning of 2020 and made the necessary run-the-business changes to improve operational efficiency and reduce costs. As such, IT services vendors evolved their relationships and are now working with clients to ensure their IT and workforces are modernized, secure and digitally enabled and their operations are resilient.

Uncertainty around the pandemic can continue to create disruptions like the supply chain challenges faced at the onset of the crisis. IT services vendors are capitalizing on their advise-build-run expertise to support clients during challenging times and capture growth opportunities, indicated by the revenue growth acceleration that began in 4Q20. Vendors are investing in digital twins to enhance their supply chain, digital sales and marketing as well as in AI and machine learning capabilities to offset pressure.

According to TBR’s special report Digital twins, innovation and Godzilla: 3 IT services trends for the rest of 2021, published in April, digital twins are becoming more synonymous within the supply chain of manufacturing firms as they present a hedge against unique macroeconomic factors, such as the pandemic. Larger technology vendors are finding partnerships, bringing cloud-enabled analytics to shipping, and opening opportunities for IT services vendors and consultancies. These openings allow for interoperability across supply chains, orchestration of technologies and data, and change management.

With COVID-19 disrupting global supply chains and forcing participants to seek alternative channels to either reduce transaction costs enabled by blockchain or transform IT infrastructure by migrating applications to cloud to offset technical debt and diminish financials pressure, some vendors have had the opportunity to gain a prime position. Six of the top 10 revenue leaders in industrial solutions, manufacturing and automotive accelerated revenue growth year-to-year in 1Q21 compared to 1Q20.

Accenture is gaining traction with manufacturing clients by helping them improve operational technology security and discrete manufacturing processes to optimize efficiencies. Accenture is also investing in developing, integrating and connecting smart devices that help Accenture drive Industry X-centric sales and extensions into C&SI services around analytics and AI. SAP implementation opportunities enabling agile IT infrastructure through SAP Business Suite 4 HANA and improving customer experience through SAP Fiori, illustrated by the deal expansions with Siemens Gamesa Renewable Energy and Johnson Controls, helped Infosys grow vertical sales 7.4% on an annual basis in 1Q21.

Acquisitions contribute to IT services vendors’ expansion in engineering and R&D services

The acquisition of Altran in April 2020 expanded Capgemini’s capabilities and revenues in the sector. On Jan. 1 the company established Capgemini Engineering, a new global business line and brand. Capgemini Engineering includes 52,000 engineers and scientists and provides R&D and engineering capabilities in three domains: product and systems engineering, digital and software engineering, and industrial operations.

In March Cognizant announced plans to acquire ESG Mobility, a Germany-based provider of engineering R&D servicers for autonomous and electric vehicles. The acquisition will provide Cognizant with advanced technologies to complement its existing automotive capabilities, giving the company an opportunity to upsell existing clients that are targeting growth in autonomous or connected vehicles.

Recent acquisitions, such as Eximius Design and International TechneGroup Incorporated, bolstered Wipro’s capabilities around digital engineering services and product lifecycle management, which will strengthen the company’s ability to provide client-specific outcomes in areas like industrial manufacturing, a vertical that cloud platforms are targeting for growth given the IaaS opportunity related to IoT data.

DXC’s acquisition of Luxoft in 2019 continues to enable DXC to move up the value chain as it expanded the company’s presence in Europe, deepened its expertise within the manufacturing industry and added high-value digital engineering capabilities. During 1Q21 DXC Luxoft launched a joint venture, ALLUTO, with LG around vehicle customer experience and will focus on the commercialization of digital automotive technologies, such as in-vehicle entertainment and infotainment as well as ride-hailing systems.

The 1Q21 IT Services Vendor Benchmark, which published on June 30, extends the analysis above to include how pairing technology and engineering skills and low-cost presence positions India-centric vendors for growth in manufacturing in the coming quarters and further adoption of technology partners’ solutions to advance Industrial IoT initiatives.

Note: This blog has been adapted from TBR’s 1Q21 IT Services Vendor Benchmark, which provides a quarterly assessment of leading IT services vendors’ performances and an assessment of their strategies. A newly launched Industry Views section within the benchmark provides analysis that focuses on one industry sector. In 1Q21 TBR began with a deep dive on the industrial solutions, manufacturing and automotive sector. Every quarter we will alternate industry deep dives with geo deep dives.

‘Get it right, be convincing and do it fast’: PwC’s Risk Proof upends risk assessments

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As the New Equation was announced, PwC’s Cyber, Risk & Regulatory practice was ready

When PwC US Chairman Tim Ryan described trust within the firm’s recently unveiled “The New Equation,” he discussed a variety of business issues, including data, compliance, and environmental commitments, that increasingly challenge PwC’s clients and that “all come back to trust.” The firm, in Ryan’s explanation, can help clients build trust not only within their own organization but also as a client’s core characteristic. Ryan’s description of the importance PwC places on trust, highlighted as part of the firm’s US Analyst Day earlier this month, loudly echoed what TBR heard from the firm’s Financial Crimes team earlier this year during a briefing on the firm’s Risk Proof product offering.

Jeff Lavine, PwC’s Global Financial Crimes leader, told TBR in May that PwC’s Cyber, Risk & Regulatory practice helps clients quantify and measure risk; tell their boards, investors and regulators a convincing and compelling story; and move clients from checking the risk box to administering meaningful control over their enterprise’s risks. That extension of trust — from PwC, fully through the client and into the client’s ecosystem — perfectly syncs with the firm’s New Equation and suggests sustained alignment throughout the various parts of PwC, including the new Trust and Consulting organizations, will be critical to making the New Equation the kind of generational change Ryan anticipates.

Lavine and Vikas Agarwal, PwC’s Risk Products and Financial Crimes Unit leader, detailed for TBR the overall Cyber, Risk & Regulatory practice, including several distinct service lines, from strategy, to data analytics, implementation, and managed services. The Strategy service line takes a compliance and licensing perspective into advising clients on opportunities, particularly around financial technology (fintech). Risk and Controls, staffed by former regulators and experienced risk professionals, provides advice, testing and validation for clients’ risk practices. Operations, the largest of the service lines, provides anti-money-laundering and Know Your Customer (KYC) solutions, primarily based on open-source technology, which, according to PwC, helps the firm more rapidly deliver results. According to Lavine, “We go faster because we’re not a platform.” And Technology and Analytics focuses on implementing risk solutions.

With these well-established service lines providing a foundation, PwC — as part of the firmwide recognition of PwC Products — examined the opportunities for developing a robust, scalable and flexible product to bring the firm’s expertise to a wider market. PwC considered feedback from clients across the full spectrum of the firm’s engagements around risk, examined where white space existed in the current market, and analyzed which current risk trends and needs would continue beyond the next few years, ensuring PwC could build — and properly price — a sustainable and profitable product.

From consulting engagements to subscriptions: A better way to assess risk

Risk Proof, PwC’s platform approach to risk assessment, helps clients perform three basic but essential actions: quantify and measure risk; tell a more robust story to boards, investors, employees and clients; and transition from taking an administrative and reactive risk posture to exercising meaningful risk controls. With features common now in many PwC Products, such as customizable dashboards and interactive reporting, the Risk Proof platform also builds on the firm’s trusted brand around data, financial reporting, compliance and, increasingly, technology.

From a functional perspective, Risk Proof appears to be straightforward; from a strategic perspective, Risk Proof addresses what Agarwal described as critical for enterprises in increasingly interconnected and data-intensive ecosystems, stating that “getting a good risk assessment is foundational to a good financial crimes practice, for example.” While Agarwal may have been reflecting views primarily held by financial institutions required to meet financial crimes regulations, the overall sentiment that good risk assessment is foundational to good business practices stretches across every enterprise and all industry segments. And for companies seeking help around risk, PwC’s Risk Proof solution, in Lavine’s words, allows them to “get it right, be convincing and do it fast.”

Risk Proof also helps PwC. Currently, the firm conducts 15 to 20 risk assessments per year, using a methodology that, while thorough and expansive, requires considerable manual processes and runs up against data and audit trail limitations. In place of these risk assessments, clients can now subscribe to Risk Proof and access all the assessment, reporting and decision-making tools at a fraction of the traditional risk assessment engagement costs. While that opens up a wider market for PwC — those enterprises less likely or unable to pay Big Four rates for risk services — Risk Proof also cannibalizes PwC’s risk revenues.

For Lavine, even with that cannibalization, the firm benefits in the long run in three ways. First, PwC is acting upon itself, rather than being disrupted, which gives the firm some control over the pace and damage of any cannibalization. Second, the Risk Proof dashboard helps PwC better understand its clients, allowing the firm to make better-informed recommendations for other consulting or technology-driven work, ultimately boosting the total relationship value. And, third — rather neatly echoing Ryan’s point about trust and the New Equation — reducing a client’s spend on risk while increasing the client’s capabilities to assess, report and manage risk further enhances the trusted relationship between the client and PwC and between the client and its customers.

Quick Quantum Quips: July quantum developments encompass the entirety of the ecosystem

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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 keeps the community up to date on recent announcements while stripping away the hype around developments.

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

July Developments

July quantum industry events spanned the full spectrum of the quantum stack. IBM installed its second quantum system internationally with a research center as part of its ongoing collaboration efforts, which are focused as much on skills development as they are on system innovations. Additionally, incremental scientific improvements are occurring across rival technology stacks in the race to achieve fault tolerant quantum computing. PsiQuantum received large cash infusions for its photonics research, Honeywell released papers outlining its high-fidelity single-qubit and two-qubit gates and China outlined a series of breakthroughs that may give analysts pause from a geopolitical perspective.

Lastly, Dartmouth College announced a collaborative research effort on the various materials that can be utilized in the manufacture of qubits. This last announcement, while low in the overall quantum stack, will be critical for manufacturing yields as these rival quantum architectures inch ever closer to viable, economically advantageous systems to apply against real-world intractable problems. 

IBM: Big Blue continued its global quantum expansion with its second international deployment of its flagship quantum computer, IBM System One, in the Kawasaki Business Incubation Center, located just outside Tokyo in Kawasaki, Japan. The deployment is part of a 2019 partner agreement between IBM and the University of Tokyo, and is IBM’s second-ever on-premises quantum installation, following the one it completed for Germany’s Fraunhofer Institute in June.

These international deployments should prove advantageous as IBM improves relations with influential organizations, which will allow IBM to tap into their deep academic talent pools. Another benefit of having closer relations with academic and research institutions is the ability to evangelize the technology and skills development needed to grow the talent pool from the roots up, a strategy IBM has supported for years. The company’s partnerships and recent deployments illustrate how it is tactically executing on the early phases of that strategy.

PsiQuantum: This quantum startup came out of stealth mode last year with a $215 million venture capital investment round with notable investors such as Blackrock and Microsoft, which caught the attention of the quantum industry. PsiQuantum, a quantum computing hardware company that is using photonics as its qubits, has the ambitious goal of creating a 1 million qubit processor — a milestone that is expected to unlock the potential of a universal quantum computer.

In late July PsiQuantum announced another colossal funding round with Blackrock and Microsoft as returning investors in its Series D round that net the company $450 million. In May the company signed a deal with GlobalFoundries to house PsiQuantum’s quantum chip manufacturing inside GlobalFoundries’ fabrication facilities. This partnership is critical as PsiQuantum plans to leverage fabrication techniques used in classical semiconductors being produced today. While the company asserts it has customers in various industries and is providing use-case and algorithm identification services, it has had limited means to produce meaningful revenue without a prototype. While development of a million-qubit processor is still a long way out, the investment provides PsiQuantum additional capital to scale its R&D operations while maintaining significant cash runway.

Honeywell: In September 2020 Honeywell Quantum Solutions introduced its latest 10-qubit ion trap quantum computer, System Model H1. Since then, the company has made strides to improve the fidelity of the system and the overall system performance metric created by IBM, called Quantum Volume (QV). When the system was released, it had a QV of 128, and in March the system reached a QV of 512. In July IBM announced it doubled its QV once again, achieving a QV of 1024. The system averaged a single-qubit gate fidelity of 99.99(1)% and an average two-qubit gate fidelity of 99.72(6)%. The company attributed the improvement to techniques involving real-time error correction by creating a logical qubit out of seven linked ion trap qubits.

China: Three papers on quantum computing and communication achievements of physicists at the University of Science and Technology of China were published in arXiv.org, an open-source archive owned by Cornell University that contains pre-peer reviewed scientific papers. One of the three papers reported that the physicists had successfully transmitted single photons over 300km of fiber using quantum dots. A second paper reported an achievement in photonics where scientists were able to detect 113 individual photons using Gaussian boson sampling (GBS), which was an improvement on the 76 detected photons from previous experiments. The third paper discussed an experiment that built on Google’s 2019 Sycamore demonstration, using a 66-qubit superconducting computer. The paper claims that the sampling problem the quantum computer finished was “2-3 orders of magnitude higher than the previous work on 53-qubit Sycamore processor” in computational difficulty.

Since none of these papers have been peer reviewed yet, it is imperative the results be taken with a grain of salt. However, considering the concealed nature of China’s quantum computing developments, the papers provide a window into the country’s progress. With techno-nationalism and geopolitical tensions peaking, there is a likelihood that in the coming months political action will take place in the West in the form of investment as the quantum race heats up.

Dartmouth: The Thayer School of Engineering at Dartmouth College is launching a three-year initiative that will be led by the school’s Engineering Professor Geoffroy Hautier and include researchers from the University of California, Berkeley, and the Lawrence Berkeley National Laboratory.

Funded by a $2.7 million grant from the U.S. Department of Energy, the initiative’s focus is to identify various materials that can be used as viable qubits for quantum computing. There are currently a handful of materials being used — depending on the compatibility of their properties with the architectural framework of the device — to create differing qubits, with the synonymous goal of storing quantum information. Some examples of these qubit foundations include Ytterbium ions (ion trap), silicon atom electrons (spin qubit) and photons (photonic), among many more. Research into the raw materials and those that are best suited for production will provide the long-term benefit of improving manufacturing yields at scale.