Enterprises eye potential for Second Life

Even Socialtext CEO Ross Mayfield isn't sure how seriously he's taking the fact that his company's next press conference will be a virtual event on World of Warcraft (WoW). Partly, he's doing it to parody the suddenly trendy idea of companies hosting business events within the confines of such virtual worlds as WoW and Second Life (SL). "Too much of what it's become is the easy answer for a large company to do something just for the sake of being cool," he said. But he also admits that companies could benefit from being virtual. "There's tremendous promise for virtual worlds being used as a collaboration platform," he said. Some of the large companies he mentioned, such as Sun and IBM (Quote), have recently held press conferences, meetings with financial analysts and brainstorming sessions in virtual worlds like SL and WoW. The virtual in world These worlds are inhabited by three-dimensional representations of the users themselves, called avatars, and are filled with anything the citizens of those worlds want to make, from chairs and coffee tables to huge open-air arenas capable of seating thousands of "people." In SL, users can customize their avatars to make them look anyway they want, and they can move around by walking, flying or teleporting themselves. They can also create goods and services and sell them to each other using a virtual currency called Linden dollars (after Linden Lab, the San Francisco-based company that runs SL). Linden dollars can be exchanged for U.S. currency at a rate of approximately 270 to 1 (this rate fluctuates on the Linden currency exchange). No one knows how far this will go. But IBM thinks enough of its potential to invest $10 million just to see what kind of collaboration tools it can develop within SL and other virtual worlds. Sun recently held a virtual press conference on SL. And it was the first company to host its financial analyst day on SL. But it surely won't be the last. Consumer brands as far-ranging as Nike (Quote) and General Motors (Quote) have established a presence on SL as well, and there is so much activity there now that Reuters has set up a news bureau to report on events "in-world." And in case you're wondering, there is an acronym for where we are right now, which is IRL (in real life). But while this is undeniably a phenomenon, the question is whether it's a passing fad or one worth noting. Passing fad or here to stay? Proponents suggest a multitude of benefits. For one, virtual worlds are an easy way for companies to test new ideas. "You can use it as a kind of unfocused focus group with more spontaneous, unscripted feedback," noted JupiterKagan analyst Joe Laszlo. Chris Melissinos, Sun chief gaming officer, said that SL is allowing Sun engineers to connect with users in ways they haven't been able to before. No responsibility can be taken for the content of external Internet sites. Until now, "a lot of technology decisions have been made in a vacuum," Melissinos said. Melissinos said Sun was able to introduce a new storage device, code-named Thumper, to a large number of channel partners, so they could see it up close and look at it from a variety of angles. "You can't do that on a webcast. It's hard to do even in real life, because you're limited by how many people you get up on the podium. On Second Life, I can make as many of these as I need," he said. This phenomenon isn't limited to multinational corporations. For the last six months, Little Wonder Studio, based in Burbank, Calif., has been using SL to create virtual models of complicated wind-up toys before building actual prototypes. CEO Robert Curet said that SL has changed his business by allowing him to think through complex design problems more quickly. "I can think of something on my drive into work, build a rough model in SL by lunch, troubleshoot and adjust the build by mid-afternoon and e-mail images to a China factory by 5pm. It's amazing! I can then talk with engineers in China that night and have preliminary costing on a project the next day," he wrote in an email. IBM sees a vast potential for using virtual worlds to encourage collaboration among colleagues. In a recent blog post, IBM CTO Irving Wladawsky-Berger noted that human beings are more likely to understand complicated concepts when they are presented in visual forms. He said that IBM may be able to drive more revenues through its consulting services by visualising business processes through virtual worlds. "Perhaps for the first time, we will be able to understand what is really going on in a business and its various processes, and then systematically improve and optimize them," he wrote. Virtual worlds are also places where employees can mingle and interact more freely than during a web cast or video conference call. According to Joi Ito, vice president of Technorati, virtual conferences or meetings make information more memorable than conventional ones. "Landscapes and texture contribute to your ability to remember," he said. But people are also finding that participants in virtual events can be more easily distracted from their strictly business purposes. "I am experienced with the SL world," noted Curet. "But for my clients it's always a new experience. They tend to want to experiment with moving their avatars, or they don't quite know how to chat, or adjust their camera angles. Still, they enjoy the experience." SL in particular has attributes that make it more attractive to businesses than other virtual worlds. Ito noted that SL "has gotten a bunch of things right." Principal among them, he said, is that content created by users remains their property, both in-world and IRL. "SL is one of the few or maybe the only virtual world that provides a creative commons and allows people to own stuff," he said. "There's more incentive to be creative inside the game." One SL inhabitant created a game called Tringo in-world and has since licensed it to electronic game manufacturers IRL. Catherine Smith, director of marketing at SL, said that "you own the intellectual property rights of anything you create in-world." Trouble in virtual paradise? But virtual worlds are far from trouble-free. "People tend to do things they wouldn't do in life, like storm the stage or chatter incessantly," said Melissinos. They are also less secure than many enterprises would like. Thus, companies will have to strike a balance between the spontaneity they wish to inspire in virtual worlds and the caution they have to exercise because of the inherent insecurity of places like SL. They might want their employees collaborating -- even, sometimes, with competitors -- but they wouldn't want to reveal too much information. Not to mention that scammers or even corporate spies could crash a corporate event and steal trade secrets. The site has also been vulnerable to viral attacks like copybots, which copy assets and then allow its authors to resell that property as their own. Melissinos said that SL is not an appropriate venue for anything remotely confidential. "It's not stable enough yet that I would feel comfortable enough to hold sensitive meetings there," he said. Safe to say, most companies will remain on the sidelines and allow IBM, Sun and others to experiment in their place. Chances are, there won't be any startling breakthroughs in the next few months or years that they will credit to their participation in SL. But that doesn't mean they won't benefit hugely in the long run. "People are going to over-anticipate in the short term but underestimate the long-term effects," said Ito.

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