D-Wave’s CEO on Making Quantum Pay

Since its founding in 1999, D-Wave [QBTS] has scored a number of firsts in the increasingly crowded world of quantum computing. 

The first company to begin building a quantum computer, in March D-Wave announced it had achieved “quantum supremacy” — the point at which a quantum machine can solve an issue too complex for a classical computer to handle, no matter how advanced. 

Dr Alan Baratz, CEO at D-Wave, is a relatively recent convert to quantum computing, having joined the company in 2017 as Senior Vice-President for Software and Applications, before becoming President and CEO in 2020. 

With 25 years of experience in product development at technology companies, he was quickly convinced of quantum’s value. 

However, he cautions that, amid the hype, potential customers should ask three key questions when considering working with a quantum computing company: “Can your system solve problems better than they can be solved classically? Are your systems highly reliable and available? And do you have examples of where you’ve worked with commercial companies to be able to deliver value?” 

Why Quantum Annealing? 

From a research standpoint, the advantage of quantum computing is clear — Baratz cites a recent study published in Nature whereby D-Wave’s quantum computers “solved a magnetic materials computation in minutes that would take nearly a million years to solve on Frontier at Oak Ridge National Lab, which is one of the largest and most powerful supercomputers in the world.” 

Even at this early stage, quantum computers can outperform classical computers — even the most advanced supercomputers. 

The devil is in the details, however. Baratz outlines two key architectural approaches for quantum computing: quantum annealing and gate-based computing. 

Broadly speaking, quantum annealing seeks to find the lowest energy state for a given problem, thus determining its most optimal solution. A gate-based model, however, is theoretically capable of algorithm creation, allowing it to solve a wider variety of problems. 

When D-Wave entered the field, “the engineering had not yet progressed to the point where there was line of sight to how you could build a gate model system.” As a result, they started with a quantum annealing system, and remain the only company in the world utilizing quantum annealing today. Others primarily use gate-based models, which Baratz stresses are “still at a very immature R&D stage, where really all that’s going on is research experimentation.” 

D-Wave’s systems, in contrast, are commercially viable, as they can solve key business optimization problems. “Frankly, most of the important hard problems that businesses need to solve are business optimization problems,” Baratz notes. As an added plus, annealing “is a much easier technology to work with. It’s easier to scale and it’s much less sensitive to errors.”

But does that mean a leap in development of gate-based computing will one day make annealing obsolete? 

Apparently not: “It’s that there are some applications that will always run best on annealing, and there are other applications that will always run best on gate. So you’re always going to need both.”

Customer-Ready Quantum

Despite the complexities of quantum computing, D-Wave’s business model is one shared with many technology-as-a-service companies: “we sell access to our quantum systems, we sell our quantum systems, and then we sell professional services to help our customers build and deploy applications that are of value to them.”

Perhaps the most compelling part of D-Wave’s story is how its technology is already being used by companies across industries. From optimizing manufacturing processes to organizing cell tower utilization, quantum solutions are being tested and deployed at a commercial scale.

For example, Ford Otosan, a joint venture between Ford Motors [F] and Koç Holding [KHOLY] in Turkey, has used D-Wave’s systems to reduce the time needed to schedule the automotive assembly process. 

Elsewhere, with Nippon Telegraph and Telephone Co’s [NTTYY] NTT Docomo, D-Wave performs cell tower optimization processes — a process that takes 27 hours with classical computers but just 40 seconds with a quantum computer. Plus, by “leveraging the solutions that come out of our quantum systems, each cell tower can support up to 15% more cell phones, which means lower infrastructure costs for NTT Docomo.”

Applications like these are turning heads. D-Wave experienced 502% year-over-year growth in bookings in Q4 2024. The company serves some 100 customers, consisting of 70 commercial companies and 30 government or educational clients. Out of the 70 commercial clients, Baratz explains, more than 20 are Forbes Global 2000 firms. 

“As we are demonstrating success with customers, word is getting out,” he says.

And what of the escalating trade war between the US and China? Palo Alto-based D-Wave is unlikely to be affected. Since quantum computing is a sensitive technology for the US government, D-Wave does not sell to China. Nor would tariffs affect the cost of manufacturing. “If you look at the bill of materials associated with our quantum computers, less than 10% of the cost is parts from China,” Baratz explains. “Plus, if we had to, we could pretty easily design them out.”

Quantum Revolution

For Baratz, quantum’s inflection point is now. Referring to the company’s yearly customer conference, he notes how much has changed in public perception of the technology. “Last year, the hallway discussion was, how does this really work? Do you think that there’s a way that I could get some value out of these quantum systems? Whereas this year, the hallway discussion was, okay, how can we put an agreement in place to get started?”

Currently, D-Wave’s systems are helping with what Baratz calls “evolutionary” problems: “this isn’t about attacking problems that can’t be solved classically. It’s about solving current problems better than they are being solved today.”

However, what he terms “revolutionary” applications are likely to be where quantum experiences its greatest leap — that is, problems where “classical doesn’t have the horsepower to get anywhere near good-enough solutions”. 

In that regard, he’s most excited about the problems that no one has thought of yet. “If we look out over the 10-year time frame, I think we will be amazed at some of the things that quantum computers are helping us do.”

Listen to the full episode on Apple Podcast, Spotify or watch on Youtube.