The experts are convinced that in time they can build a high-performance quantum computer. Given the technical hurdles that quantum computing faces—manipulations at nanoscale, for instance, or operating either in a vacuum environment or at cryogenic temperatures—the progress in recent years is hard to overstate. In the long term, such machines will very likely shape new computing and business paradigms by solving computational problems that are currently out of reach. They could change the game in such fields as cryptography and chemistry (and thus material science, agriculture, and pharmaceuticals) not to mention artificial intelligence (AI) and machine learning (ML). We can expect additional applications in logistics, manufacturing, finance, and energy. Quantum computing has the potential to revolutionize information processing the way quantum science revolutionized physics a century ago.

The full impact of quantum computing is probably more than a decade away. But there is a much closer upheaval gathering force, one that has significance now for people in business and that promises big changes in the next five to ten years. Research underway at multiple major technology companies and startups, among them IBM, Google, Rigetti Computing, Alibaba, Microsoft, Intel, and Honeywell, has led to a series of technological breakthroughs in building quantum computer systems. These efforts, complemented by government-funded R&D, make it all but certain that the near to medium term will see the development of medium-sized, if still error-prone, quantum computers that can be used in business and have the power and capability to produce the first experimental discoveries. Already quite a few companies are moving to secure intellectual property (IP) rights and position themselves to be first to market with their particular parts of the quantum computing puzzle. Every company needs to understand how coming discoveries will affect business. Leaders will start to stake out their positions in this emerging technology in the next few years.

Every company needs to understand how quantum computing discoveries will affect business.

This report explores essential questions for executives and people with a thirst to be up-to-speed on quantum computing. We will look at where the technology itself currently stands, who is who in the emerging ecosystem, and the potentially interesting applications. We will analyze the leading indicators of investments, patents, and publications; which countries and entities are most active; and the status and prospects for the principal quantum hardware technologies. We will also provide a simple framework for understanding algorithms and assessing their applicability and potential. Finally, our short tour will paint a picture of what can be expected in the next five to ten years, and what companies should be doing—or getting ready for—in response.

How Quantum Computers Are Different, and Why It Matters

The first classical computers were actually analog machines, but these proved to be too error-prone to compete with their digital cousins. Later generations used discrete digital bits, taking the values of zero and one, and some basic gates to perform logical operations. As Moore’s law describes, digital computers got faster, smaller, and more powerful at an accelerating pace. Today a typical computer chip holds about 20x109 bits (or transistors) while the latest smartphone chip holds about 6x109 bits. Digital computers are known to be universal in the sense that they can in principle solve any computational problem (although they possibly require an impractically long time). Digital computers are also truly reliable at the bit level, with fewer than one error in 1024 operations; the far more common sources of error are software and mechanical malfunction.

Quantum computers, building on the pioneering ideas of physicists Richard Feynman and David Deutsch in the 1980s, leverage the unique properties of matter at nanoscale. They differ from classical computers in two fundamental ways. First, quantum computing is not built on bits that are either zero or one, but on qubits that can be overlays of zeros and ones (meaning part zero and part one at the same time). Second, qubits do not exist in isolation but instead become entangled and act as a group. These two properties enable qubits to achieve an exponentially higher information density than classical computers.

Qubits can enable quantum computing to achieve an exponentially higher information density than classical computers.

There is a catch, however: qubits are highly susceptible to disturbances by their environment, which makes both qubits and qubit operations (the so-called quantum gates) extremely prone to error. Correcting these errors is possible but it can require a huge overhead of auxiliary calculations, causing quantum computers to be very difficult to scale. In addition, when providing an output, quantum states lose all their richness and can only produce a restricted set of probabilistic answers. Narrowing these probabilities to the “right” answer has its own challenges, and building algorithms in a way that renders these answers useful is an entire engineering field in itself.

That said, scientists are now confident that quantum computers will not suffer the fate of analog computers—that is, being killed off by the challenges of error correction. But the requisite overhead, possibly on the order of 1,000 error-correcting qubits for each calculating qubit, does mean that the next five to ten years of development will probably take place without error correction (unless a major breakthrough on high-quality qubits surfaces). This era, when theory continues to advance and is joined by experiments based on these so-called NISQ (Noisy Intermediate-Scale Quantum) devices, is the focus of this report. (For more on the particular properties of quantum computers, see the sidebar, “The Critical Properties of Quantum Computers.” For a longer-term view of the market potential for, and development of, quantum computers, see “The Coming Quantum Leap in Computing,” BCG article, May 2018. For additional context—and some fun—take the BCG Quantum Computing Test.)

The Critical Properties of Quantum Computers Here are six properties that distinguish quantum computers from their digital cousins.

The Emerging Quantum Computing Ecosystem

Quantum computing technology is well-enough developed, and practical uses are in sufficiently close sight, for an ecosystem of hardware and software architects and developers, contributors, investors, potential users, and collateral players to take shape. Here’s a look at the principal participants.

Tech Companies

Universities and research institutions, often funded by governments, have been active in quantum computing for decades. More recently, as has occurred with other technologies (big data for example), an increasingly well-defined technology stack is emerging, throughout which a variety of private tech players have positioned themselves.

An increasingly well-defined technology stack is emerging.

At the base of the stack is quantum hardware, where the arrays of qubits that perform the calculations are built. The next layer is sophisticated control systems, whose core role is to regulate the status of the entire apparatus and to enable the calculations. Control systems are responsible in particular for gate operations, classical and quantum computing integration, and error correction. These two layers continue to be the most technologically challenging.Next comes a software layer to implement algorithms (and in the future, error codes) and to execute applications. This layer includes a quantum-classical interface that compiles source code into executable programs. At the top of the stack are a wider variety of services dedicated to enabling companies to use quantum computing. In particular they help assess and translate real-life problems into a problem format that quantum computers can address.

The actual players fall into four broad categories. (See Exhibit 1.)