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Friday, April 4, 2008

Virtual World Gets Another Life

Virtual business 2.0.

Not long ago, companies were racing to set up storefronts and showrooms in computer-generated environments such as Second Life. Few found big profits.

But commercial interest in such simulations seems to be morphing, not diminishing. Rather than selling goods and services to users -- who typically take on animated shapes known as avatars -- companies are turning to virtual offices and landscapes as tools for employees and business partners to collaborate and learn.

The shift, in some cases, requires big changes in the way computer simulations are designed and used. Where companies may be happy to hold the equivalent of parties or trade shows in public virtual spaces, for example, conducting confidential business over a network of servers that another company controls can be worrisome.

"I can think of a few reasons to not use public infrastructure with no guarantee of security," says Christian Renaud, Cisco Systems Inc.'s chief architect for networked virtual environments.

Such issues are expected to be a major focus at the Virtual Worlds 2008 conference opening Thursday in New York. For example, International Business Machines Corp. and Linden Lab, the San Francisco-based operator of Second Life, plan to announce a relationship under which IBM will run Linden software on its own servers so the computer maker can set up private Second Life environments.

Meanwhile, start-ups such as Qwaq Inc., Multiverse Network Inc. and Rivers Run Red are showing off technology that offers companies the equivalent of a private "workspace" -- simulated three-dimensional rooms that allow employees to meet as avatars, view presentations and conduct other business.

"It gives companies a walled garden to experiment in," says Justin Bovington, chief executive of Rivers Run Red, a London-based company that does consulting work for companies using virtual environments.

Some of these ideas are not new. Alan Kay, a computer researcher known for groundbreaking inventions at Xerox Corp. and other companies, notes that prototypes of computer-generated workspaces were part of a famous demonstration in 1968 by Silicon Valley pioneer Doug Engelbart.

But perfecting such concepts has taken years, and major advances in computing power, software and networking speeds. To render scenes that look realistic, for example, personal computers typically need sophisticated graphics chips.

Linden Lab, founded in 1999, developed a kind of browser program that renders images and allows users to move through a simulated environments. It assigns pieces of territory to individual servers, allowing Second Life to expand geographically by adding more machines.

Individuals, companies and educational institutions design the equivalent of homes, offices and play spaces, often "buying" the equivalent of private islands. Users take assumed names and can alter their clothing and appearance, and buy virtual goods and services using a currency that is convertible into dollars.

Second Life has plenty of competition, including free-form sites such as Makena Technologies Inc.'s There and MindArk PE's Entropia Universe, and services for specific audiences -- such as the kids-oriented Club Penguin site that Walt Disney Co. purchased last year for $700 million. Such public environments can create opportunities for branding and marketing.

But there are downsides for businesses. Because avatars often carry pseudonyms, for example, customers or co-workers may not be immediately recognizable. Some pranksters have exploited anonymity to disrupt gatherings.

So companies have been developing in-house virtual worlds, aided by software from vendors such as Activeworlds Inc. and Forterra Systems Inc. Sun Microsystems Inc., meanwhile, has developed its own software, called Project Wonderland, and a simulated building called MPK20 that employees of the computer maker can use to collaborate.

Sun teams from around the world attend simulated meetings, at which their avatars may view presentations and videos and hold discussions. The biggest value of MPK20 is stimulating the kind of collaboration that comes from chance encounters, like those employees might have in a real hallway, says Nicole Yankelovich, who manages Sun's collaborative environment team.

Start-ups pursuing similar goals include Qwaq, a company in Palo Alto, Calif., that inherited work once conducted by a Hewlett-Packard Co. team under Mr. Kay. Qwaq co-founder David Smith, a pioneer in interactive gaming, helped develop software called OpenCroquet to let PCs render virtual worlds. That software, which is available to other programmers on an open-source basis, helps companies set up simulated spaces for animated meetings and to manage projects, says Greg Nuyens, Qwaq's chief executive.

Costs for corporate virtual environments can vary widely, especially if much custom programming is involved. Qwaq charges $60 a month per user for small groups; equipping a 10-person unit would cost $7,200 a year, Mr. Nuyens says.

Multiverse, founded by former employees of Web browser maker Netscape Communications Corp., plans to manage a network of virtual games and business environments accessible by a common three-dimensional browser. Eventually most Web sites may become three-dimensional. "You will be able to go to any site and there will be a 3D interactive option," predicts Erica Driver, an analyst at Forrester Research.

But there are many steps between here and there. Linden, whose founder, Philip Rosedale, recently announced plans to relinquish the job of chief executive, has been offering companies more control over their spaces in a program it calls Second Life Grid.

The IBM deal is the first time Linden has allowed another company to run its software. Colin Parris, IBM's vice president for digital convergence, says the arrangement enables the controlled movement of employee avatars and objects they create to pass among public parts of Second Life and private zones managed on IBM servers.

"There has been so much hype and puffery around virtual worlds," says Ginsu Yoon, Linden's vice president of business affairs. "It's really important to Linden Lab to be able to demonstrate that it is able and willing to meet the requirements of companies like IBM

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