How Amazon plans to catch Google and Microsoft in the quantum computing race

Another major player has entered the quantum-computing race: Amazon. 

The tech giant is the latest to make waves in the field with the February announcement of Ocelot, its own quantum chip. Amazon joins fierce competition from familiar rivals in cloud computing as Google, Microsoft and others race after what they say could be their next frontier. 

While Amazon is widely known as an e-commerce giant, its business took a pivotal and profitable turn in 2006 with the launch of Amazon Web Services. AWS is now a more than $100 billion business and a key part of why Amazon is worth over $2 trillion. The company sees quantum as the next major growth area for its cloud services.

"There's a … strong business case for AWS or Amazon to get involved with quantum computing," Oskar Painter, director of quantum hardware for Amazon Web Services, told CNBC. "Quantum computing is very much in line with that sort of business model where you would have off-premise quantum computing resources that can be made accessible through the cloud." 

Part of the hype with quantum computing is the perceived payoff down the line. While still years away from commercial applications, McKinsey projects quantum could be a $173 billion market by 2040. 

"The opportunity to build just a supercharged part of AWS that can crack incredibly difficult problems, whether it's related to drug discovery or cybersecurity … that is an opportunity for them to charge a lot more," said Gene Munster, managing partner at Deepwater Asset Management.

CNBC's Kate Rooney got an exclusive look inside the AWS Center for Quantum Computing located at the California Institute of Technology in Pasadena, California. Founded in 2019, Amazon's partnership with the university is starting to yield results, as it showcased the Ocelot quantum processor. Amazon says the chip, which it designed and fabricated in-house, uses a scalable architecture that reduces error correction by up to 90 percent. That's a key obstacle in developing these machines. Google's Willow chip, which was unveiled in December, also demonstrated improvements in this area.

Ocelot uses "cat qubits," named after the Schrödinger's cat thought experiment. The company says the design intrinsically suppresses certain forms of errors, reducing the resources required for quantum error correction.

"The heart of these quantum computing systems … it's really this quantum processor" Painter said. "The details of how that happens is really what differentiates one hardware platform from another – and really is where the secret sauce is and where all the intellectual property is."

Munster said quantum-computing should be thought of as a new vertical within the AWS cloud business. 

"In the end, it will probably be solved and monetized through one of these big cloud platforms," Munster said. "And AWS has a great shot at being successful there."

Watch the video as Kate Rooney goes behind-the-scenes at Amazon and learns how the company is taking on Google and Microsoft in the quantum computing race.