The Billion-Dollar Opportunity of On-Premise Quantum Computing

At Q2B Silicon Valley, Michael Baczyk from Global Quantum Intelligence presented a talk on on-premises computers. Here is a brief summary.

Quantum computing is reshaping the technology landscape, promising revolutionary advancements in fields ranging from optimization to cryptography. While cloud-based access has been a dominant deployment model, on-premise quantum computing is gaining significant traction. A recent report by Global Quantum Intelligence (GQI) highlights emerging trends, buyer and seller dynamics, and the long-term potential of this growing market, offering a roadmap for stakeholders to navigate this complex ecosystem.

The Rise of On-Premise Deployments

On-premise quantum computing installations are expanding across industries as organizations prioritize control, security, and reliability. While the trend isn’t new, recent technological advances have accelerated its adoption. Deployment models now span a wide range of configurations to suit specific applications, signaling a more mature market.

Notable Trends:

• Logical qubits, a critical component for quantum error correction, are expected to become a major driver for on-premise adoption.
• Increasing performance of cloud systems. Early examples like the Heron R2 processor, which achieved the “100x100 challenge” milestone in November 2024, underscore the potential of these systems to rival on-premises solutions in performance.

Buyer Motivations: Why Organizations Invest

The decision to invest in on-premise quantum computers often stems from unique organizational needs. Key drivers include:‍

• ‍Data Security and Sovereignty: Governments and industries managing sensitive data prioritize on-premise systems to maintain control and minimize vulnerabilities.‍
• Availability and Reliability: Dependable systems with minimal downtime are critical for organizations with high computational demands.‍
• Scalability: Many buyers view quantum systems as a long-term investment that must scale alongside advances in quantum technologies.

Buyers range from government agencies to enterprises in industries like healthcare, finance, and energy, with use cases spanning optimization, simulation, and machine learning. As systems improve, the emphasis on scalability and future-proofing grows stronger.

Seller Strategies and Market Offerings

Quantum computing vendors are responding to these demands with tailored strategies to win over buyers:

• Customizability: Vendors are focusing on solutions tailored to specific applications, ensuring a fit-for-purpose approach.‍
• Integrated Support Ecosystems: Offering robust SDKs, software support, and training programs has become a key competitive differentiator.‍
• Future-Proofing: Sellers are building clear roadmaps to fault-tolerant quantum computing (FTQC), which buyers see as essential for long-term adoption.‍
• Turnkey Systems: Vendors are emphasizing ease of installation, maintenance, and upgradeability to reduce operational complexities for customers.

Notably, partnerships in consulting and co-development are becoming common, as buyers look to leverage the expertise of vendors to maximize the value of their systems.

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Key Metrics and Challenges

The report identifies several critical metrics that influence the on-premise QC market:

1. Lead Time: Long procurement and installation times remain a barrier to widespread adoption.‍
2. Integration Costs: Buyers must account for the cost of integrating quantum systems with existing HPC (High-Performance Computing) infrastructure.‍
3. Security Concerns: Export controls and political risks, especially for cross-border transactions, present additional complexities.‍
4. Utility of NISQ Systems: Organizations remain cautious about the utility of current noisy intermediate-scale quantum (NISQ) systems and require assurances of future capabilities.

Despite these challenges, the market is advancing. According to the GQI report, on-premise deployments are projected to contribute significantly to the quantum value chain, offering solutions to bridge the “valley of death” often faced during commercialization.

‍Future Outlook: Cloud vs. On-Premise

As the debate continues between cloud-based and on-premise quantum systems, the future likely involves a coexistence of both models. While cloud solutions offer flexibility and rapid scalability, on-premise systems cater to organizations needing enhanced control, sovereignty, and bespoke configurations.

Blind quantum computing and other advances may eventually close the gap between security needs and cloud solutions, but for now, private machines are indispensable for many buyers. The on-premise model also serves as a sandbox for organizations to explore and innovate without the constraints of shared infrastructure.

Conclusion: The Road Ahead

The on-premise quantum computing market represents a billion-dollar opportunity for organizations willing to invest in cutting-edge technologies. Whether driven by security concerns, the need for scalability, or long-term strategic goals, buyers and sellers are aligning to push the boundaries of what is possible.

The market is primed for growth. For stakeholders, the key is to navigate challenges while capitalizing on the immense potential of quantum technologies to redefine industries.

Quantum computing is no longer a far-off dream—it is here, and on-premise deployments are leading the charge into a transformative era.

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Michael also shared with us additional details:

• The median price for computer sales is 12.5M USD with a spread from 0.5M for QPU-only (no electronics and environment control) through tens of millions for full installations to half a billion dollars in case where the whole facility has to be established as well.
• For most of the cases (around 85%), the deals are for single computer though with maintenance offered from the vendor side. Only a few companies offer the possibility to upgrade - even then you have to pay extra