Monday, April 30, 2007

Get a (Second) Life!

Businesses should devote serious thought to creating a virtual world strategy (and perhaps learn from cats)

"Virtual worlds" such as Second Life hold out a promise that is dramatic, liberating and irresistible to most: a parallel, electronic world where people can conduct their lives unencumbered by many real-world constraints and botherations. But is this promise merely a phenomenon conjured up by over-zealous marketers , technology buffs and varied commercial interests, or is it backed by true capabilities?

Let's look at some facts. Second Life, the most popular virtual world environment, certainly appears to have crossed the early adopter stage. It lists the total number of its users at a significant 5.8 Million, of which about 1.78 Million are active users.

More importantly, many leading companies have got together a Second Life act. Adidas Reebok , Nissan, Mazda, Toyota and Starwood Hotels are all deeply engaged in Second Life initiatives. Dell sells PCs there. IBM, Sun are active. IBM CEO Sam Palmisano visited and held a meeting in second life recently. The company has reputedly even set up a business group t o address Second Life forays. Reuters has a news bureau in second life. Harvard Law School has offered a course there.

Perhaps a key sign that a technology has arrived is when governments start adopting it. The Swedish government is setting up an embassy in Second Life, thru the Swedish institute, an affiliate of it's foreign ministry. The City council of Manchester, UK has taken a few Second Life islands .

All is, of course, not hunky-dory. Numerous observers have counseled caution on various grounds. There is a need to look at success metrics that go beyond usage numbers. A very down-to-earth caution is that the products and services that real world companies can offer may appear mundane in the context of the fantastic, imagination-stretching possibilities that seem easy in cyberspace. In an environment where people seem able to jump tall buildings, air sole shoes can hardly be termed as exciting.

Nevertheless, a virtual world offers people enormous possibilities to break out from real world constraints and do things impossible in the real world. With increasing familiarity and access to technology, people will welcome the chance to use this new-found freedom in realizing their potential in ways that they could previously only imagine. Even more fundamentally, it is not inconceivable that many people will see this as an opportunity to create from the ground up, a new identity that they always wished for but could never have in real life. Thus it can safely be expected that virtual worlds such as Second Life will see widespread traction and uptake from people of all ages and persuasions. The sociological ramifications of such a blurring between the real and imaginary worlds can be staggering, but that is a subject for a different day.

So, how serious a note should businesses take of this phenomenon? Smart companies go where people go. If people are flocking towards the virtual world, then companies need to go there too. If they want to show they are tech-savvy, and get mindshare with the young crowd , who make up the market of the future. They can also actually generate revenues (sell products and services) thru this route . As with any endeavor that needs to catch people's imagination and fire up large numbers of people, first-mover advantages are obvious.

Is the road ahead paved with Silicon? While that may be overstating things somewhat, it seems clear that the lives of large numbers of people alive today will increasingly involve excursions into the wild blue yonder of worlds that exist only in computer-enhanced reality. In the meanwhile, it appears inescapable that every company worth it's salt should busy itself thinking up a Second Life strategy - even if that strategy is only an informed wait-and-watch.

The most apt approach is perhaps to be like a cat - wait and watch with great care, but be ready to jump when the time is ripe. But unlike cats, companies (and people) are not naturally endowed with nine lives, and so should welcome the opportunity to be granted a lease into a second life.