Will the Most Successful Quantum Firms Be Software Companies?

The argument for quantum computing investors is largely focused on hardware, as companies race to achieve increasingly impressive qubit counts and error rates. Although technologies are still largely untested in commercial applications, there is also a great deal of debate over which architecture—from annealing to trapped-ion and more—is most promising.

While this debate assumes that the company building the most powerful quantum device will win the market, it obscures the element that may be poised to actually generate increasing revenue for companies, including D-Wave Quantum Inc. NASDAQ: QBTS, Rigetti Computing NASDAQ: RGTI, and Quantum Computing Inc. NASDAQ: QUBT: the software and cloud layer, and more specifically, Quantum Computing as a Service, or QCaaS.

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We're in a Noisy Middle Period

Part of the reason that QCaaS seems to matter now is that the quantum computing industry is in a noisy middle period in which machines are able to operate with up to around 1,000 qubits, but in which errors still remain frequent. Fault-tolerant quantum computing appears to be years off, making it likely that hardware won't fully scale in the near- to medium term.

Instead, access to quantum tools may be more easily monetized to allow clients to run hybrid classical-quantum systems and to complete vital tasks on quantum processors without actually owning the hardware.