IonQ’s bet on commercial quantum computing working, acquires Quibitekk

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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IonQ's bet to focus on making quantum computing applications relevant for enterprises today instead of waiting for quantum supremacy appears to be paying off nicely.

The company lifted its sales outlook for the 2024 to $38.5 million to $42.5 million. IonQ said fourth quarter revenue will be between $7.1 million to $11.1 million. In the third quarter, IonQ reported a net loss of $52.5 million, or 24 cents a share, on revenue of $12.4 million, up 102% from a year ago.

• IonQ's quantum computing bets: Quantum for LLM training, chemistry and enterprise use cases
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• Quantum Computing Software Platforms
• Quantum Full Stack Players

Although those revenue figures are small compared to a market cap currently at $3.52 billion, IonQ's approach is gaining commercial traction. Consider:

• IonQ said it will partner with AstraZeneca to develop quantum applications for drug discovery and development.
• The company announced a deal with Ansys to bring quantum applications to computer-aided engineering.
• Inked a $9 million partnership with the University of Maryland.
• Partnered with NKT Photonics to develop and deliver three prototype optical subsystems for IonQ systems in 2025.
• And acquired Quibitekk, a quantum networking company. Quantum networking is a potentially large market and IonQ expects it to be its first cash flow positive unit.

Chapman said to scale IonQ will leverage Quibitekk to network its systems together. IonQ paid $22 million in cash for Quibitekk, which has partnerships with telecommunications companies.

"Quantum networking, like classical networking hardware, is also expected to require several orders of magnitude more physical hardware than quantum computing to build the infrastructure for the quantum internet," said Chapman. "This is another element of the networking market, where IonQ is particularly well suited, given the investments we have made over the past years to scale up our production manufacturing capabilities."

IonQ also said that it landed $63.5 million in third quarter bookings including a $54.5 million award from the US Air Force Research Lab.

On IonQ's earnings conference call, CEO Peter Chapman said, "one can no longer ignore the scale of IonQ's commercial success." Chapman added that 18 months ago, the company bet that it could make its quantum systems enterprise ready.

• Will IonQ make quantum computing enterprise relevant in 2025?
• Why your quantum computing vendors are going to look familiar

"In the quantum world, there are two camps or schools of thought on this topic. One camp believes you need near perfection before value can be unlocked. If they are correct, sadly, Quantum is still a long way off. The naysayers belong to this camp, but their numbers are dwindling every day.

The other camp, which IonQ and others belong to, believe today's early noisy quantum computers can provide value even before they are perfected. If we are right, it gives us a significant advantage by generating early meaningful cash collection as we work towards perfection."

Chapman acknowledged that he wasn't concerned with academic arguments over quantum computing. The plan was to take IonQ's integrated quantum stack and apply the technology for commercial value.

The focus for IonQ is to make sure it has software ready to go when its latest hardware systems are ready to roll.

"When we have the hardware done, we want the software to come along at exactly the same time as when the hardware is ready to run those applications," said Chapman. "We're timing those two things together. What the two announcements that are today with both Ansys and AstraZeneca are the beginnings of working on those applications."

While IonQ’s commercial traction is impressive, the company will still face tough competition from much larger companies.

• IBM upgrades IBM Quantum Data Center with Heron
• IBM Boosts the Software Side of Quantum
• Quantinuum, Microsoft claim quantum reliability breakthrough
• Microsoft claims hybrid quantum breakthrough with Quantinuum, partners with Atom Computing
• Quantinuum raises $300 million, valued at $5 billion
• Classiq CEO Minerbi on the intersection of quantum computing, HPC and use cases
• Quantum Brilliance, Oak Ridge National Laboratory aims to meld quantum computing, HPC

Constellation Research analyst Holger Mueller said:

"The race for software is heating up, as vendors want to see utlization as soon as the hardware is ready. So it is no suprise IonQ is focussing on software readiness as well, assuming its Forte Enterprise system is delivered and it's on track with its Tempo system. In the meantime, the revenue is in quantum scale encryption - so the acquisition of Quibitekk makes sense and deliver immediate, reliable revenue."

Unit4 CEO Ettling outlines self-driving ERP strategy that operates in background

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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If Unit4's strategy is successful, midmarket enterprises will leverage the company’s ERP platform and employees will never know it, said CEO Michael Ettling.

The Unit4 strategy revolves around a "self-driving ERP" plan where the platform operates in the background with automated workflows that come to multiple applications.

Speaking at the Unit4 Analyst Summit in Philadelphia, Ettling outlined the midmarket ERP vendor's strategy. Unit4 is focused on people-centric companies (think services), non-profit and education with up to 10,000 employees.

Ettling said:

"Today, we are on ERP X, and tomorrow we're chasing this vision of self-driving ERP. We think this is going to become more and more prevalent. My Holy Grail of self-driving ERP is that you buy my ERP and nobody in the organization ever logs into it. Your access is through Microsoft Teams, Slack or through whatever. No one wakes up in the morning and logs in to the ERP to do ERP work."

This Unit4 strategy could be ahead of its time. As generative AI becomes the new UI for enterprise software, many of the SaaS applications you log into will fade to the background. With copilots and agentic AI, the concept of headless enterprise applications is going to be more prevalent. 

• GenAI may be the new UI for enterprise software
• Agentic AI without process optimization, orchestration will flop
• Enterprises leading with AI plan next genAI, agentic AI phases

To Claus Jepsen, Chief Product and Technology Officer at Unit4, the self-driving ERP concept is really about not having a UI for ERP. Jepsen:

"The way we look at this is that the best user experience is actually no UI. The best ultimate user experience is you don't even have to go into the ERP. ERP systems have a tendency to be very monolithic with complex UIs. There should be a mix between a conversational user experience where we move users away from dealing with the maintenance of data."

Constellation Research analyst Holger Mueller said:

"Unit4 has been painting a compelling vision of ERP for close to a decade. The good news is that it is now serious about moving customers to the cloud with an end of life date by end of 2026. The migration of the masses has not started yet - so all eyes will be on 2025 and Unit4 getting its customer base to move to ERPx."

Unit4, which has €425 million in revenue, ARR growth of 25 and cloud ARR growth of more than 25%, has been on a transformation of its own since 2021 to evolve the product and support it. The company has migrated to the cloud, focused on ERP workflows and integrated automation with robotics process automation with the ability to swap into generative AI.

The stack, which uses Microsoft Azure as its infrastructure, breaks down like this:

Unit4 is "gently nudging" its on-premises customers to the cloud with a common platform. On-premises customers have until the end of 2026 to migrate to the cloud. Unit4 announced the transition in October 2023. There will be exceptions based on government use cases, data sovereignty and security needs.

Ettling said that the move to get customers to go to the cloud enables AI and automation delivery. Unit4 is betting that the real value in ERP is in the workflows, AI and automation between the components--finance, HR and projects--on a common data model that is extensible.

"AI is obviously the buzzword of the moment and we've been thoughtful about how we approach AI," said Ettling. "For AI to work you still need to read and write a transaction and then get AI to do something with those transactions." Ettling also said the company's work with RPA extends into large language models too. That argument has also been made by UiPath. The general idea is that automation and process is more important than the underlying models powering workflows and experiences. 

• How leaders need to think about AI, genAI
• Takeaways on successful AI, generative AI projects

Ettling said:

"Generative AI is now just a different smart in smart automation, as opposed to something new. It's the user experience in self-driving ERP and processes that enable it. Sometimes it may be AI, but sometimes it may also be a robotic solution or something else. We really have a view on AI that it's part of the user experience. A lot of the marketing or story around AI is AI for the sake of AI, as opposed to AI to deliver better on a North Star."

Other takeaways from Ettling's talk:

• Unit4 wants to get 1 billion annual revenue by chasing a North Star of a self-driving ERP that's automated.
• 95% of new logos added to Unit4 over the last two years are cloud deals.
• Unit4 is open to mergers and acquisitions for smaller tuck-in deals that would add functionality or provide a legacy base that can be converted to the cloud.

Research:

• Constellation ShortList™ Services-Centric Cloud ERP
• Constellation ShortList™ Enterprise Application Platforms

• How Magnox is Transforming Employee Experience

Arm Q2 licensing, royalties shine due to complex AI chips

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Arm said more complex AI chips are driving license revenue as its second quarter was better-than-expected with and in-line third quarter outlook.

For the third quarter Arm said it expects non-GAAP earnings between 32 cents a share and 36 cents a share with revenue between $920 million to $970 million. Wall Street was expecting third quarter non-GAAP earnings of 34 cents a share on revenue of $951 million.

Arm reported fiscal second quarter earnings of $107 million, or 10 cents a share, on revenue of $844 million, up 5% from a year ago. Non-GAAP earnings were 30 cents a share. Analysts were expecting earnings of 26 cents a share on revenue of $810.9 million.

• Arm's data center takeover: A lumpy revolution
• Arm launches compute subsystems optimized for AI for edge devices
• GPUs, Arm instances account for larger portion of cloud costs, says Datadog
• Nvidia outlines roadmap including Rubin GPU platform, new Arm-based CPU Vera

Arm CEO Rene Haas said:

"Demand for our high-performance Armv9 and CSS compute platforms continues to exceed expectations, and to accelerate our licensing and royalty revenue growth. AI everywhere is generating new opportunities for the Arm compute platform from the cloud to the edge."

In a shareholder letter, Arm executives said the company is benefiting from "AI everything" and the need for more energy-efficient chips.

"Demand for Compute Subsystems (CSS) has been higher than expected and is also contributing to licensing growth. Our royalty revenue growth has also been very positive. Royalty revenue is benefiting from higher revenue per device as more customers deploy our latest high performance Armv9 to address AI demand and as our CSS royalty revenue ramps. The cumulative number of chips shipped by the Arm ecosystem has now exceeded 300 billion."

Qualcomm Q4 shines, ups outlook for Q1

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Qualcomm delivered fourth quarter revenue growth of 19% as it saw strength across its smartphone, auto and Internet of things units.

The company reported fourth quarter earnings of $2.92 billion, or $2.59 a share, on revenue of $10.24 billion, up 19% from a year ago. Non-GAAP earnings were $2.69 a share.

Wall Street analysts were expecting Qualcomm to report fourth quarter non-GAAP earnings of $2.57 a share on revenue of $9.93 billion.

For 2024, Qualcomm reported earnings of $10.14 billion, or $8.97 a share, on revenue of $38.96 billion, up 9% from fiscal 2023.

• Top 5 Takeaways from Qualcomm AI Day | With Analyst Andy Thurai
• PC upgrade cycle to be driven by AI, but calling timing has been difficult

CEO Cristiano Amon said the company's product cadence is strong and positions us well across handsets, PC, automotive and industrial IoT." The company will outline plans to diversify its business on November 19. On a conference call, Amon said:

"As the strong pace of AI innovation continues, there is now broad recognition of the opportunity for on-device AI to enable new capabilities and transform the human-computer interface. On-device AI provides context, enhances immediacy and reliability, and enables personalization while providing privacy and security. Additionally, GenAI-enabled devices and applications are evolving to understand natural language, images, sound, and the world around us, driving a new generation of AI-first experiences. This has the potential to create a new cycle of semiconductor innovation and content, and Qualcomm is well-positioned to capitalize on this opportunity across devices at the edge."

Qualcomm has moved to expand into AI PCs as well as automotive and IoT. Ultimately, Qualcomm is expected to expand in the AI server processor market as well as edge computing.

Constellation Research analyst Holger Mueller said:

"Qualcomm had a very strong Q4 with all revenue lines growing, The growth in automotive is particularly encouraging, a market that has been traditionally slower for Qualcomm, but showed 68% growth. Qualcomm almost doubled its EPS. Cristiano Amon and team remain optimistic with an realistic but optimistic growth for the next fiscal year. All eyes will be on the performance and uptake of the new Snapdragon Elite platform."

Handsets fourth quarter revenue was $6.10 billion, up 12% from a year ago. Automotive fourth quarter revenue was $899 million, up 68% from a year ago. IoT revenue in the quarter was $1.68 billion, up 22%.

Qualcomm also said it will spend $15 billion to buy back stock.

As for the outlook, Qualcomm is projecting first quarter revenue of $10.5 billion to $11.3 billion with non-GAAP earnings of $2.85 a share to $3.05 a share.

CrowdStrike buys Adaptive Security

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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CrowdStrike said it will acquire Adaptive Shield, a company focused on software-as-a-service security. The company said Adaptive Shield will be integrated into its Falcon platform.

Terms of the deal weren't disclosed, but CrowdStrike noted it was an all-cash purchase.

CrowdStrike said the purchase will enable it to defend against identity-based attacks from on-premises Active Directory to cloud identity systems and SaaS.

The deal lands as CrowdStrike digs out from a high-profile outage and is being sued by Delta.

• CrowdStrike Q2 better-than-expected, sees subscription revenue hit due to outage
• CrowdStrike to Delta: Don't blame us for your IT outage response
• Delta puts numbers on CrowdStrike outage, sets up interesting discovery period
• CrowdStrike outage likely to hit cybersecurity's platformization pitch
• Constellation ShortList™ Cloud Native Application Protection Platforms (CNAPP)

George Kurtz, CEO of CrowdStrike, said: "As SaaS and AI adoption grows, every new application brings additional complexity and the risk of misconfigurations across human and non-human accounts that create openings for sophisticated attacks."

Adaptive Shield brings the following to CrowdStrike:

• SaaS Security Posture Management (SSPM) to provide visibility to misconfigurations and activity from human and non-human identities.
• Generative AI application security controls via Adaptive Shield's ability to control AI settings and find shadow AI applications.
• Hybrid identity and cloud security. The companies will combine Adaptive Shield with CrowdStrike Falcon Identity Protection and Falcon Cloud Security in one console and workflow.

Adaptive Shield is already integrated with CrowdStrike's Falcon Next-Gen SIEM.

• Enterprise security customers conundrum: Can you have both resilience, consolidation?
• Constellation ShortList™ Managed Detection and Response (MDR)
• Constellation ShortList™ Endpoint Protection Platforms

Supermicro cuts Q2 outlook amid ongoing audit issues, delayed annual report

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Are you going to buy your AI servers from a company that can't file an annual report and just had its auditor quit? That's the question enterprises and hyperscale cloud providers are asking after Supermicro's preliminary first quarter results.

Supermicro said that it reported in the first quarter it will report sales in the range of $5.9 billion to $6 billion, down from its previous range of $6 billion to $7 billion.

Earnings for the first quarter will be between 68 cents a share to 70 cents a share. Non-GAAP first quarter earnings were 75 cents a share to 76 cents a share. Supermicro's previous range for non-GAAP earnings of 67 cents a share to 83 cents a share.

Supermicro said its total cash and cash equivalents are $2.1 billion with debt of about $2.3 billion.

Those results come after the company has delayed its annual report and is in danger of being delisted. On Oct. 24, Ernst & Young notified Supermicro that it had resigned as the company's auditor.

• Supermicro's really bad, horrible week
• Supermicro sees fiscal 2025 revenue of $26 billion to $30 billion, up from $15 billion in fiscal 2024

As for the guidance Supermicro said sales will be between $5.5 billion to $6.1 billion in the second quarter with non-GAAP earnings of 56 cents a share to 65 cents a share. Wall Street was looking for sales of $6.79 billion with non-GAAP earnings between 80 cents a share.

• AI data center building boom: Four themes to know
• On-premises AI enterprise workloads? Infrastructure, budgets starting to align
• Blackstone's data center portfolio swells to $70 billion amid big AI buildout bet

Supermicro also updated investor on the concerns that made Ernst & Young resign. The Audit Committee said:

"The Special Committee has completed its investigation based on a set of initial concerns raised by EY. Following a three-month investigation led by Independent Counsel, the Committee’s investigation to date has found that the Audit Committee has acted independently and that there is no evidence of fraud or misconduct on the part of management or the Board of Directors. The Committee is recommending a series of remedial measures for the Company to strengthen its internal governance and oversight functions, and the Committee expects to deliver the full report on the completed work this week or next. The Special Committee has other work that is ongoing but expects it to be completed soon."

What remains to be seen is how this ongoing issue affects Supermicro sales. Supermicro is a key AI system provider. Dell Technologies, HPE and others are likely to benefit.

Bloomfilter co-CEO Severinghaus on the intersection of process mining, software development

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Bloomfilter is looking to meld process mining and process intelligence with software development via a partnership with Celonis. The goal: make developing applications at scale more efficient.

The company will power the Celonis Software Development Lifecycle Management (SDLC) application. Celonis for SDLC powered by Bloomfilter will align business priorities with technology initiatives, measure financial impact of resources and map and analyze processes and recommend ways to be more efficient.

At Constellation Research's Connected Enterprise, I caught up with Erik Severinghaus, Co-founder and Co-CEO of Bloomfilter, to talk shop. Here are some of the takeaways.

The intersection of software development and process mining. Severinghaus said the combination of software development and process mining is designed to build software that is "more efficient, more predictable, more observable and more nimble."

While software development is scaling with generative AI code, enterprises need to focus on the underlying processes. Bloomfilter, which is built on the Celonis platform, pulls in data from tools including Atlassian's Jira, GitHub from Microsoft and GitLab to show how software development is being done.

Severinghaus said:

"We pull all the information about how the software development process is working, and then we use process mining technology to help a customer understand, where there's waste, inefficiency, rework and steps that are skipped or not in compliance with the company's process. These issues could lead to production outages and security vulnerabilities."

What process mining reveals. Process mining typically has a few surprises for enterprises and the biggest one in software development tends to be rework. "You connect to these systems and pull out the way the process moves and we find things like 40% to 45% of tasks require rework," said Severinghaus. "When you look at the business impact of all of that rework, it becomes really apparent why 78% of software is late, over budget or doesn't ship at all."

Bloomfilter monitors software development processes, software process adherence, allocation of costs and the value being generated.

Why process matters with generative AI. "Enterprises are increasingly using automated code systems and there are a lot of interesting places where process interacts with AI," said Severinghaus. "First we couldn't do this without AI, but when you think about the software development life cycle there are about 15 different tools being stitched together. Customers are using AI to build software and there's been less and less governance."

Severinghaus said process mining is a way to analyze software development and pull out what's important. One of the most important things to do is to assess risk. "We are using generative AI to stitch the process together to govern what's happening in an AI-driven SDLC," he said.

The C-level buyer. Severinghaus said the buyer of Bloomfilter varies since every company is a software company today. For software companies, the primary buyer of Bloomfilter is the CTO or chief product officer. In more mainline companies, CIOs tend to be the main buyers with the CFO and COO playing a big role. "They want observability and they want to see what's happening within this black box of software development translated into words they can understand," said Severinghaus.

What's next? Bloomfilter's partnership with Celonis gives it the ability to plug into more systems including Salesforce and ServiceNow to deliver process intelligence for SDLC. Severinghaus said governance will also become vital as AI agents are including in the software development process. "If 2024 was the year of throwing AI against the wall and see what use case sticks, 2025 is very much going to be the year of how we govern and get business value out of it," said Severinghaus.