D-Wave CEO Alan Baratz on the Path to Profitable Quantum Computing | QBTS Interview

Key Concepts

• Quantum Annealing: A specialized quantum computing approach optimized for solving complex business optimization problems (e.g., logistics, scheduling).
• Gate Model Quantum Computing: A universal approach capable of solving differential equations, essential for quantum chemistry and materials science.
• Quantum Error Correction (QEC): The process of detecting and fixing errors in quantum computations; critical for gate model systems.
• Erasure Error: A specific type of error where qubit information is lost; accounts for 90% of errors in gate model systems.
• Dual-Rail Qubit: A superconducting qubit architecture that allows for the detection of erasure errors, significantly simplifying error correction.
• Fluxonium vs. Transmon: Different superconducting qubit designs; D-Wave is investigating fluxonium for potential control advantages over the industry-standard transmon.
• Hybrid Classical-Quantum Workflow: Combining classical supercomputing with quantum processing to solve large-scale, commercial-grade problems.
• Quantum Supremacy: The milestone where a quantum computer solves a problem that is practically impossible for classical supercomputers to solve in a reasonable timeframe.

1. Quantum Annealing vs. Gate Model

Dr. Alan Baratz emphasizes that these two approaches are complementary rather than competitive:

• Annealing: Highly mature, commercialized today, and excels at optimization. It does not require complex error correction to provide useful results.
• Gate Model: Currently in the R&D phase. It is required for quantum chemistry and materials design but faces significant hurdles regarding noise and error rates.
• D-Wave’s Strategy: D-Wave is the only company pursuing both, aiming to address the full spectrum of quantum use cases.

2. The "Dual-Rail" Breakthrough

D-Wave’s acquisition of Quantum Circuits, Inc. (QCI) provided a revolutionary technology:

• The Problem: Superconducting qubits are 1,000x faster than other modalities (like trapped ions) but are notoriously difficult to error-correct, often requiring 1,000 physical qubits per logical qubit.
• The Solution: The dual-rail qubit acts as a "self-reporting" system. If a photon is lost (an erasure error), the qubit "raises its hand."
• The Result: This allows for error correction with ~100 physical qubits or fewer, combining the high speed of superconducting systems with the high fidelity of trapped-ion systems.

3. Real-World Applications and Case Studies

• Missile Defense (Anduril/Davidson Technologies): Used annealing to simulate 500 incoming missiles. The quantum-enhanced solution was 10x faster and achieved a 10% higher interception rate than classical methods.
• Chemical Production (BASF): Used hybrid solvers to optimize production scheduling, reducing computation time from 10 hours to 5 seconds, enabling real-time re-optimization.
• Telecommunications (NTT Docomo): Optimized cell tower paging messages, supporting 15% more phones per tower and reducing infrastructure costs.
• Generative AI (Shionogi): Retrained a large language model for molecular discovery on a D-Wave system, resulting in molecular structures that more closely resembled the target dataset than those produced by classical training.

4. Business Model and Financial Outlook

• Dual Revenue Streams: D-Wave utilizes both "Quantum-as-a-Service" (recurring revenue) and direct system sales (upfront revenue).
• Growth: The company reported over $32 million in bookings in the first two months of 2026, exceeding the total for the previous year.
• Profitability: Dr. Baratz projects that D-Wave can reach profitability using its annealing systems alone, without needing to wait for the full commercialization of gate model systems.
• Margins: Current margins are in the 80%–85% range. Even with the higher costs of future gate model systems, the company targets margins north of 60%–70%.

5. Notable Quotes

• "There’s no evidence at all that a gate model system will be able to solve any useful problem without error correction." — Dr. Alan Baratz
• "We’re the only company in the world that’s been able to demonstrate [quantum supremacy] on a useful, real-world problem." — Dr. Alan Baratz
• "We now have excellent balance between building the next great thing and getting products into the market to help our customers derive value from them." — Dr. Alan Baratz

6. Synthesis and Conclusion

D-Wave is positioning itself as a dual-threat in the quantum industry. By leveraging the immediate commercial viability of quantum annealing for optimization problems, they are generating revenue and building customer trust. Simultaneously, their acquisition of dual-rail qubit technology provides a high-speed, error-efficient path to the future of gate model computing. The company’s shift toward a "production-first" culture, combined with a strong cash position and a clear roadmap to profitability, distinguishes them from competitors who remain focused primarily on long-term R&D.