On Tuesday, I flew out to Mountain View, Calif., to watch a demonstration. Now, I don't normally drop a few hundred dollars on airline tickets and a hotel and spend a full day away from work to watch a small start-up company publicly tout its technology. But this was no ordinary technology. This was a quantum computer.
And so it was that yesterday, D-Wave, a quantum computing company -- and a portfolio holding of Motley Fool Rule Breakers pick Harris & Harris (NASDAQ:TINY) -- provided the first ever commercial demonstration of just such a computer.
Sure, some purists might claim that what D-Wave did was not officially quantum computing, and I don't have the expertise to either substantiate or disprove that claim. But for the record, the company did say it was engaged in something called adiabatic quantum computing and that it was employing superconducting magnetic flux qubits.
Huh? Is your head spinning already? If so, I understand. But in the realm of quantum computing, if your head's spinning, it would actually be spinning in opposite directions at the same time. Try wrapping your head around that.
I will spare you the detail of how the computer works, primarily because I have only the faintest idea myself. In the simpliest terms I can offer, I'll tell you that the computer harnesses the power of quantum mechanics to resolve problems by getting qubits -- a.k.a. quantum bits, or units of quantum information -- to settle to their lowest natural energy state. I know that that is hardly a satisfying answer, but try to think of what a quantum computer does as offering a physical solution to a computing problem. Readers interested in learning more about the intricacies of how the technology works are encouraged to visit the company's website.
A historical analogy
As regular readers of The Motley Fool will recognize, whether I am providing a short history of the pearl industry to explain the power of nanotechnology, using the 50th anniversary of IBM's (NYSE:IBM) first magnetic-storage device to search for the next 50-bagger or using the old video game Pong to understand where robotic technology might be headed, I find that one of the most useful methods for thinking about the future of new emerging technologies is to draw on history for some perspective.
Therefore, in an attempt to shed some light on what occurred yesterday, let me take you back to Dec. 17, 1903, the day Wilbur and Orville Wright first achieved flight. What the two men accomplished that day was obviously of historic importance, but the casual observer could have been forgiven, after watching the aircraft sail only 12 seconds for a total distance of 120 feet, for thinking that not much would ever come from the accomplishment.
Even two years later, after planes were flying for 24 miles, it still wasn't easy for the average person to envision the commercial potential of this new technology. In fact, most Americans were still not even aware of what the Wright Brothers had achieved by 1905.
If, however, a person had some imagination and a solid understanding of where the airplane's enabling technology was headed, it might have been possible to see that the airplane was at least on the verge of solving a few of the transportation industry's more intractable problems -- such as quickly delivering a small number of people and products to areas that neither railroads nor automobiles then served.
From this viewpoint, it would then be apparent that the airplane was not so much a replacement for existing transportation technologies as it was a much-needed supplement.
Computers' intractable problems
And so it will be with D-Wave's quantum computer and the computing industry. Company officials made it quite clear yesterday that the demonstration was intended only as a "proof of principle" and that they were not unveiling a commercially viable product. Instead, what they wanted to do was demonstrate how its quantum computer could help the existing computing industry solve a number of its more intractable problems.
For instance, a problem can have so many variables that as each new variable is added into the mix, the solution becomes exponentially more difficult to solve. This is a vexing problem for modern computing. In essence, the possible solutions grow so rapidly that they outpace even today's most powerful supercomputer's ability to arrive at a solution.
Yesterday's demonstration was run on a 16-qubit processor, and while it did not tackle any intractable problems, it did quickly solve three different challenges put before it -- including a few Sudoku puzzles. This might not sound impressive, but it was significant in the same way that the Wright Brothers' 12-second, 120-foot flight was significant because of what it portended for the future.
The future looks bright
By the middle of this year, D-Wave plans to introduce a 32-qubit processor, and by early 2008, it intends to have a 512-qubit model ready. If all goes according to plan, a 1,024-qubit processor should be available by the end of 2008. That would mark an extraordinary amount of progress, and if the company can pull it off, it'll be the equivalent of jumping from that 120-foot flight to 24-mile flight in just a little more than a year.
In more practical terms, this progress implies that within a year, companies could be knocking on D-Wave's door looking for solutions to its most serious problems.
And what might these companies be? That's a good question. D-Wave believes there is a $9 billion market for its unique services and that any number of companies involved in bioinformatics, banking, defense, semiconductors, and transportation might be willing to rent time on its quantum computer.
As one potential example, company officials noted that AstraZeneca (NYSE:AZN) was able to gain a patent extension on its highly successful and lucrative drug Prilosec by identifying a new molecule that could improve the drug. Finding such molecules is no easy task, but that is just the sort of problem at which D-Wave's quantum computer excels. With its technology, it hopes to make inroads in the pharmaceutical industry.
The quantum computer's real expertise resides in "optimizing" problems. Among other potential clients are semiconductor-industry leaders such as Intel (NASDAQ:INTC), Advanced Micro Devices (NYSE:AMD), and Texas Instruments (NYSE:TXN), which are all in desperate need of finding the best way to optimize the real estate on next-generation semiconductors.
D-Wave's computer can also potentially assist banks such as Citigroup (NYSE:C) better optimize the billions of dollars that it must manage on a daily basis. It could also aid major transportation companies such as FedEx and UPS, which could use the technology to determine the most efficient routing schedule for its fleet of planes and trucks.
Foolish final word
Quantum computing, like the airplane, has the potential to solve some big problems, and as the technology scales up, new opportunities will undoubtedly emerge. But while I am bullish on both the technology and the company (I am an investor in Harris & Harris), I would be remiss in not recalling one last lesson from history. The airline industry, for all its wonders, has been a net loser of money over the course of its lifetime.
Now, I don't believe the same will be true for the quantum-computing industry, but it is a very risky field, and investors should go into it with their eyes open. The technology, like the airplane, has the ability to save all types of people and businesses time and money. It just remains to be seen whether the quantum-computing industry itself can make money.
Interested in reading more about Harris & Harris? Check out these articles:
Harris & Harris is a Motley Fool Rule Breakers recommendation. UPS is an Income Investor pick, and FedEx is a Stock Advisor selection. Intel has been recommended in Inside Value. Check out any of our newsletter services free for 30 days.
Fool contributor Jack Uldrich doesn't get too bothered by his lack of understanding of quantum mechanics, because it even flummoxed the great Albert Einstein, who called some of its actions "spooky." Jack owns stock in Harris & Harris and Intel. The Fool has a strict disclosure policy.
