Living your second life

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: When some IBM sales people met in Second Life recently to interact with their customers, they were neither on to their next incarnation, nor in some mystical trance of alternate consciousness. They were merely part of a new business centre that IBM had created in a virtual world called Second Life, which, developed by California-based Linden Lab, exists only in cyberspace. To become a “resident”, you must adopt a virtual “avatar” for yourself, and when you interact with others via your computer, you do so with others who have done likewise.

Spotting opportunity, Big Blue has created an entire office, with different zones for reception, client briefing and conferencing, akin to a real-life office. It even has a live business networking facility in cyberspace. And IBM is not alone on the virtual planet. There many companies using the social networking model for business activities. They include Adidas, ING, Penguin, Philips, Reebok, Vodafone and BBC. They are being helped by a new breed of immersive space service providers like Rivers Run Red or The Electric Sheep Company to establish their virtual presence and brand promotions to attract global consumers. And IBM quotes market research firm Gartner to reveal that by the end of 2011, 80% of active Internet users and Fortune 500 companies will have an alternate life, but not necessarily a Second Life. There are other similar online spaces, like There, Active Worlds, and the adult site Red Light Center.

As businesses flock to these virtual sites, Reuters has formed a Second Life News Center that reports exclusively on happenings in this new “metaverse”. It covers topics as diverse as discussions on brand methodology, expositions on jewellery design and the music and psychology of cyberspace. Bringing it close to the real business world, Second Life has even issued a currency: Linden dollar (L$) and Reuters regularly reports its exchange rate against the US dollar. On September 19, for instance, one US dollar was equivalent to 268L$, while US$1,150,777 was spent in a 24-hour period that day in Second Life.

So, what is all the hubbub about? As the Net continues to shatter boundaries between the real and cyber worlds, marketers believe that the shift towards virtual marketplaces is going to redefine the business models of companies that are targeting global consumers. Virtual business, or v-business, is the future. Since most companies are trying to trim physical assets, workers and overheads associated with the corporeal world, they would find virtual businesses more attractive. Plus, the business potential is huge, as vendors would be targeting over a billion Internet users worldwide who are already exploring new online ways of shopping conveniently.

Marketers in the 3-D virtual world can respond quickly to demand by conducting lifelike product demos, awareness campaigns, customer meets, and even actual sales in a trendy online space. The visual impact here tends to be more appealing than traditional interactive options like chat or conferencing, and so companies can even hold employee training sessions, quarterly sales meetings and everything else cost effectively.

However, it may not be feasible for most companies that use traditional Internet business models to immediately switch over to virtual markets because of fresh investment and technology migration issues. In any case, as most companies are marking their presence by hiring private virtual islands, “real estate” costs on sites like Second Life are rising. On the other hand, lack of high-speed broadband connectivity (a must to be able to operate effectively in a virtual marketplace) in many consumer markets could prove to be another dampener. There could also be some inter-operability glitches for front-end users who work on traditional proprietary systems, as the preferred backend technologies for virtual site operators are expected to be based on open standards.

Still, marketers must not worry. These could just be the teething troubles associated with any paradigm shift. Eventually, such new forms of collaboration, communications and commerce will help marketers address fresh demand on a global scale. And virtual business models may ultimately turn today’s bit players into real global powerhouses.