One of the main assumptions we have here at the Quantum Computing Report is that history repeats itself. Specifically, we believe that many aspects of industry structure and development that we have seen in other technology markets, such as semiconductors, personal computers and hard disk drives, can teach us about what may happen in the quantum computing market. With the recent acquisition of QxBranch by Rigetti Computing, it is a good time to think about what these prior markets can teach us about industry consolidation.
Shown below is an example of how consolidation occurred in the hard disk drive industry to result in today’s situation where only three companies remain in this market.
There were at least 19 companies that have participated in the hard disk disk market at one time or another, not counting any companies that were started and went out of business without ever being acquired. Some of the reasons that companies disappear include the following:
As of today’s writing we are tracking 125 companies on the Private/Startup page of the Quantum Computing Report and our expectation is that almost all of them will either go out of business or be acquired. The number that make it to an IPO and become independent, public companies will be only a handful at best.
We expect a consolidation to eventually happen in quantum computing, but we expect this will be a slow process and may take as long as 20 or 30 years. One of the first signs to look for would be when a certain technology approach starts to become dominant. In the semiconductor industry this occurred when it became apparent when CMOS became the preferred approach for mainstream chips over the Bipolar, NMOS, and GaAs technologies. A later sign of upcoming consolidation will occur when price competition starts appearing. Although it may seem inconceivable right now, there could be a time when quantum computing is seen by customers as a commodity and available from a number of low cost suppliers. We see this situation as still very far away, but remind people that even IBM, one of the early entrants into personal computers, faced this situation with personal computers in 2004 and decided to sell off this division to Lenovo.
So it will be a very dynamic market landscape over the next decade or two. In the near term we expect that even more startups will continue to form but also expect to see others drop out or be acquired. We already know of two companies that have already been closed. It will be interesting for us to track on the Quantum Computing Report and look forward to reporting on it in the coming years.