IBM’s ‘over the horizon’ quantum strategy brings current revenue & creates future opportunities
(TGDaily) Robert Enderle discusses IBM’s long-term strategy that “. . .should put them into leadership contention once quantum computing can be validated and monetized”. IQT-News summarizes below.
Enderle points out that IBM is one of only a few remaining companies in technology that maintains a formal lab effort looking ‘over the horizon’. Where most firms focus on the tactical things they can bring to market or improve over a short period of time interspersed with occasional and often poorly funded Moon-shot efforts, IBM funds long-term research that helps them move on opportunities early.
The issue that IBM and every other large public company faces in the Western World, except in China, is the need to provide positive returns on a quarterly cadence. That focus on short-term profits at the expense of long-term initiatives puts western businesses at far higher risk of being displaced by Chinese companies over time because Chinese government subsidizes efforts like this aggressively with a strategic goal of displacing the U.S.
This means that like most every CEO in a U.S. publicly owned company, IBM’s CEO faces an ongoing expense for long-term development projects that will serve to reduce his compensation due to how they erode profits, but his successor is likely to get the benefit if the effort is successful.
IBM has developed a creative solution to this problem in its IBM Quantum University. It’s a set of services, starting with a free service for those new to the field, that allows people learning about quantum computing to gain cloud access to IBM’s limited set of working, but still sub-optimal, quantum cloud instances.
Users have access to a set of tiered resources. The “Open Plan” is free to those just getting started. The next three, which come with charges, are the “Pay-as-you-go” plan, the “Premium Plan” and the “Quantum Accelerator.” The related fees defray IBM’s development expense and potentially assure the project remains well funded until it can be fully commercialized in the future.
IBM uniquely operates at the cutting edge of technology in several areas but, increasingly, the company must find a way to get funding during the development process. Since the industry will need people who are trained to create and operate quantum computers once they are broadly available, IBM has tied their project-related revenue into projects designed to educate those people. This provides a revenue stream to the company that should substantially offset the costs of development until the technology is ready for production.
Innovation like this, coupled with a unique focus on the rapidly approaching strategic future, makes it likely IBM will survive its second century in the market when most companies fail well within half a century.
Sandra K. Helsel, Ph.D. has been researching and reporting on frontier technologies since 1990. She has her Ph.D. from the University of Arizona.