The enterprise demand for quantum computing is still in its early stages, growing slowly. As the technology becomes more usable, we may see demand evolve beyond scientific applications.
The global quantum computing market is forecast to grow from $1.1 billion in 2022 to $7.6 billion in 2027, according to the latest worldwide market study by International Data Corporation (IDC).
That's a five-year compound annual growth rate (CAGR) of 48.1 percent. The forecast includes base Quantum Computing as a Service, as well as enabling and adjacent Quantum Computing as a Service.
However, this updated forecast is considerably lower than IDC's previous quantum computing forecast, which was published in 2021, due to lower demand globally.
Quantum Computing Market Development
In the interim, customer spend for quantum computing has been negatively impacted by several factors, including: slower than expected advances in quantum hardware development, which have delayed potential return on investment.
Besides, the emergence of other technologies such as Generative AI, which are expected to offer greater near-term value; and an array of macroeconomic factors, such as higher interest and inflation rates and the prospect of an global recession.
IDC expects the quantum computing market will continue to experience slower growth until a major quantum hardware development occurs that leads to a compelling quantum breakthrough.
Until then, most of the growth will be driven by maturation in quantum computing as a service infrastructure and platforms -- for high performance intensive scientific computing workloads.
IDC now expects investments in the quantum computing market will grow at a CAGR of 11.5 percent over the 2023-2027 forecast period, reaching nearly $16.4 billion by the end of 2027.
This includes investments made by public and privately funded institutions, internal allocation (Research & Development) from technology and services vendors, and external funding from venture capitalists or private equity firms.
Of particular note is the growing interest in quantum computing by global government agencies of which 14 (13 countries, plus the European Union) have announced quantum initiatives that span multiple years and will generate billions of dollars for funding quantum computing research.
The funds allocated to the research and development of quantum computing have led to recent advancements in quantum computing hardware and software, as well as new error mitigation and suppression techniques.
These advancements fuel speculation that achieving a near-term quantum advantage may be possible using today's Noisy Intermediate-Scale Quantum (NISQ) systems.
Over the long term, these investments are expected to result in the delivery of large-scale quantum systems capable of solving complex problems that challenge today’s scientists and engineers, causing a surge in spending towards the end of this forecast period.
IDC describes 2022 as an eventful year in the quantum computing industry.
Strategic approaches implemented to reach a near-term quantum advantage using NISQ systems became more defined as vendors published quantum computing road maps emphasizing methods for improving qubit scaling, as well as new techniques for error mitigation and suppression.
To improve the accessibility and usability of quantum systems, previously inaccessible quantum modalities became accessible for end-user experimentation, while other quantum hardware vendors announced partnerships for on-premises quantum deployments.
The quantum software vendors also provided offerings for non-quantum computing specialists.
Finally, quantum hardware and software vendors announced the anticipated launch of new scientific accelerator platforms that will help with the integration of quantum, artificial Intelligence (AI), and high performance computing.
"There has been much hype around quantum computing and when quantum computing will be able to deliver a quantum advantage, for which use cases, and when," said Heather West, research manager at IDC.
Analysts at IDC believe today's quantum computing systems may only be suitable for small-scale experimentation. Regardless, organizations should not be deterred from exploring new initiatives.
That said, I anticipate the early market hype will continue to fade, and quantum computing applications forecasts will likely experience further declines over time, due to the limited practical use cases. Only time will tell when mainstream business use cases and associated applications emerge.