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| By Jon Markman |
Artificial intelligence is the driving investment story. However, another computing dynamic is coming, and it will change everything.
Engineers at Apple (AAPL) shocked the software community two weeks ago, when they revealed the next iMessage software will protect users against hacks from yet-to-be developed quantum computers.
Traditional computers operate like a light switch that can be turned off or on. They rely on bits of information designated either 1 or 0.
Quantum computing is like a strange switch that can be both off and on at the same time, among other properties. Information is stored in qubits.
Imagine a coin spinning in the air. it's neither heads nor tails until it lands. A qubit exists in this superposition state of infinite probability, holding both possibilities at once.
Now also imagine that coin is magically linked to another coin, regardless of the distance in between. When the coin flips to heads, the other coin simultaneously flips to tails. The coins are entangled.
Superposition and entanglement are the key to quantum mechanics, the foundation of quantum computing.
In theory, a quantum computer should be capable of vastly more calculations, all happening simultaneously. The development would bring next level problem solving.
Now flash forward …
Real World Applications
Researchers believe quantum computers are possible. They are not there yet. The math is tricky. However, they do see a path forward.
More importantly, researchers understand that quantum computers will change everything.
Current safeguards use cryptography built to defend against traditional computers. The first quantum computer will slice though those protections as if they did not exist … leaving governments, utilities, corporations and secure communications vulnerable.
Engineers at Apple want to make sure that does not happen.
PQ3 Messaging Protocol is the first for Apple. It is a codebase that uses post quantum cryptography — algorithms designed as a safeguard against hacks that use quantum computing.
Engineers hope that deploying the software today will defeat so-called “harvest now, decrypt later” strategies by future malicious hackers, according to a corporate blog post.
Investors should focus on the companies at the forefront of quantum computing. New opportunities will surface quickly for these firms. Their services will be in high demand from both anxious and opportunistic corporate leaders.
Here are the four you should pay attention to:
Quantum Leader No. 1: International Business Machines (IBM)
IBM has extensive quantum computing experience.
The New York, New York-based firm launched the IBM Quantum Experience in 2016, the first commercially available developmental quantum computer platform. Experience is collaborative and mostly open source, fostering a vibrant developer community.
IBM also has an extensive consulting business, reaching far into the financial services, pharmaceutical and public sectors. Consulting is a natural fit around quantum computing. It is likely to be a lucrative business for IBM shareholders.
Quantum Leader No. 2: Alphabet (GOOGL)
Executives at Alphabet are approaching quantum computing from a different angle.
The company is developing proprietary technologies based on superconducting qubits created with electrical circuits and supercooled to promote stability.
Cirq and TensorFlow Quantum are software frameworks to help developers experiment with quantum computing. The goal is to eventually sell cloud-based access to quantum computing at scale.
Quantum Leader No. 3: Microsoft (MSFT)
Microsoft has a full stack approach to quantum computing, mirroring the firm’s Azure cloud computing business.
Azure product managers are developing hardware, software and developer tools for a complete ecosystem. This longer-term strategy of platform development and extensive investment in research should give the Redmond, Washington-based company a formidable quantum product in the future.
Quantum Leader No. 4: Honeywell International (HON)
Honeywell leaders decided to focus on leveraging a specific technology called trapped-ion quantum computing. This involves charged atoms held in place by electric and magnetic fields.
Company research shows these ions can be manipulated using lasers. The goal is to bring this technology to specific industries like materials science and drug discovery, according to the corporate information post.
The bottom line is that like AI 10 years ago, quantum computing is coming.
Technology investors are wise to understand that disruption is part of the process. It is important to look ahead … and to invest accordingly.
All the best,
Jon D. Markman
P.S. Of course, as with AI before it, much of the innovative work in this field will come from startups and pre-public companies. My colleague Chris Graebe is the expert in this investment space. In fact, he just presented his favorite tech-based startup that is about to open up a round of new funding you can jump in on. Check it out here.
