Barron's: Microsoft and Amazon want to own the quantum ecosystem before it is ready

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Barron's has a piece arguing that while quantum computing is not ready for prime time, Microsoft and Amazon are already positioning themselves to own the ecosystem around it. I will keep this on the technology side rather than investment talk. The basic idea is that rather than winning purely on their own hardware, both companies want to be the platform everyone else's machines run through, much like their cloud businesses today. That is how both companies came to dominate cloud computing in the first place

Microsoft has opened a new research centre in Maryland connected to DARPA's evaluation work, and is partnering with Atom Computing to deliver a system called Magne to Denmark next year, with $90 million in backing. It is also developing its own quantum programming language and offers access to third party hardware through Azure Quantum. Microsoft's quantum lead Jason Zander said they are looking for better benchmarks to build better hardware. It is a busy roadmap for a technology still in its infancy

Amazon has partnered with neutral atom company QuEra and hosts quantum machines on its Amazon Braket cloud service. Since 2020 it has offered access to seven devices from five different developers, reportedly running them at a loss for the science. Amazon has also built its own error correcting chip called Ocelot, and its AI chief Peter DeSantis has said commercially useful small scale quantum computers could arrive within five to seven years. Amazon tends to play the long game

The article is honest about how early things are. Projections vary wildly, with Boston Consulting Group estimating quantum could create $850 billion of value by 2040 and McKinsey suggesting $1.3 to $2.7 trillion by 2035. QuEra's chief operating officer Yuval Boger was refreshingly blunt, describing today's quantum computers as beautiful, sophisticated toys. QuEra is targeting an error corrected machine by 2028, while IBM aims for a fault tolerant system by 2027

The platform strategy makes sense, because whoever controls access controls the customers, whichever hardware wins. Do you think the cloud giants will end up dominating quantum the way they dominate cloud computing? Or will specialist hardware makers keep their independence?

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