Are virtual worlds like Second Life here to stay? My answer is "yes, but." Yes, but virtual worlds are part of a long-term transition which also includes the mobile Internet. Yes, but the result will be a complete transformation in how we think about being "on the Internet" vs. being "away from the computer." Yes, but Second Life might not be the virtual worlds platform of the future.

I was immersed in Second Life this week (even though I've been so busy that I've hardly had time to actually log in to Second Life). I moderated a panel at the InformationWeek 500 conference in Tucson, Ariz. about Second Life. It was an introduction to Second Life for the attendees of the IW500 conference, who are high-level IT managers and CIOs for big business. You can find the formal description of the panel here, but the way I thought of it was: "Second Life - why should you care?" It was a basic explanation of what SL is, and what the business value is.

Panelists were Christian Renaud, who heads up Cisco's virtual worlds efforts; Christian Lassonde, president and co-founder of Millions of Us, a consultancy that helps companies establish their presence in virtual worlds; Bob Sutor, VP of Standards and Open Source for IBM, who is involved in IBM's virtual worlds initiatives; and John Jainschigg of Dr. Dobb's Journal, a sister publication to ours -- it's published by CMP Technology, the same company that publishes InformationWeek. John heads up our business unit that consults with other companies on doing business in Second Life.

The real star of the panel was Second Life itself. John's colleague, Sean Coady, was backstage, piloting a demonstration of Second Life on the big, 10-foot displays in front of the conference room. He kept the (virtual) camera focused on John, who joined us from Second Life in avatar form. They gave us a tour of some of the top business locations in SL.

The key to Second Life is that it's a shared experience. You have the illusion of being physically present with another person, which makes conversations richer and more spontaneous, more like face-to-face conversation.

For business, that means that Second Life provides an opportunity to have rich, long discussions with customers, employees, and business partners. As Renaud said on the panel: It's another channel on a spectrum of intimacy that ranges from e-mail (least intimate), to IM, phone, and face-to-face (most intimate). Virtual worlds are more intimate than the phone, but still less than face-to-face.

Prior to and after the panel, I spent a lot of time hobnobbing with the two Christians and Bob (in real life, not SL). We had drinks, we had dinner, we sat together at lunch. And we talked and talked and talked about Second Life in particular and virtual worlds in general, which helped me crystallize my thoughts about the future of virtual worlds.

Those of us who take Second Life seriously like to compare it too the Web in 1994. The Web back then was slow, and a lot of the technologies we take for granted today hadn't been invented yet -- simple stuff, like background images and tables, and more significant stuff, like payment-processing. Indeed, many smart people believed in 1994 that nobody would ever trust the Internet for e-commerce, because they wouldn't trust their credit-card numbers to cyberspace.

Video and audio on the Web? Only for a very few people; most of the world accessed the Web on 28.8 kbps dial-up connections.

And yet those of us who took the Web seriously in 1994 could see that it had a lot of potential, and predicted it would eventually take over the world, which it did. (And we were often ridiculed for our faith in the Web, just as virtual worlds advocates often get laughed at today.)

Likewise, those of us who take Second Life seriously today acknowledge its myriad flaws and limitations, but see in it a glimmer of a future technology which will transform the world.

Second Life might not be the virtual worlds platform of the future. It's got lots of problems. It's unstable, doesn't scale well to large numbers of users at a single event, and it's hard to use. The company faces mundane business problems: Lately, users have been complaining about breakdowns in the payment-processing system, with perfectly legitimate real-world credit-card transactions getting rejected far too frequently. Users, including some big businesses, complain that Linden Lab -- the company that owns and operates SL -- doesn't communicate sufficiently well about strategic direction.

Moreover, SL is tainted by a stigma -- too many people associate Second Life with cybersex and other behavior that legitimate businesses shy away from. Second Life is taking steps to mitigate that association, recently banning gambling and some of the more offensive forms of pornography. But those bans risk alienating SL's existing user base, who liked the gambling and porn. And the stigma still remains.

Linden Lab is working hard to overcome these problems, and there are some extremely smart people over there. But it's by no means a foregone conclusion that they'll succeed. It's entirely possible that some other technology, or cluster of technologies, will sweep Second Life aside the way Google and its current competitors swept aside the earlier generations of search engines and portals (remember Alta Vista, anyone? Hotbot?).

While virtual worlds are transforming the real world, the world isn't going to be standing still. Several other technologies will also be out there transforming the world at the same time.

The mobile Internet is the opposite of, and complementary to, virtual worlds. Virtual worlds attempt to create a 3D world inside your computer. But the mobile internet brings the Internet into the real world.

I see the first glimmer of this in my own life. I have an iPhone. It's got a lovely little Maps application in there, done in conjunction with Google and based on Google Maps. You enter your current location, and enter a search query, and the iPhone will display a list of nearby locations matching that query. For example, you might enter your current address, search on "sushi," and you find a list of sushi restaurants nearby. Tap on the icon for the nearest one, and it calls up the address, URL for the Web site (if the restaurant has one), and phone number. Tap on the phone number, and you can call the place directly. Tap on the URL, and you can view the Web site in the iPhone's built-in Web browser.

Now imagine your iPhone has a GPS in it. You don't have to tell it where you are -- it knows where you are.

Science-fiction writer Charles Stross writes about these trends in his novel Halting State, due to be released Oct.2. It's set about 12 years in the future. At one point, two characters are in a strange city and are required to switch off their mobile computers. They experience a new sensation: They get lost. One character remarks to another that this happened all the time to former generations, people didn't know where they were or how to get to their destination.

Reality augmentation is a big step beyond mobile computing. The idea there is that you can overlay information on your view of the world as you're out and walking around, the same way that titles and graphics get overlaid on a video image today. You wear goggles that display both the real-world view and the overlaid annotation and information. The displays might be transparent, and look like eyeglasses, or they might be worn against the eye, like contact lenses. Stross writes about this in Halting State, as does Vernor Vinge in the science-fiction novel Rainbows End.

The problem with reality overlays is that the displays -- the goggles, eyeglasses, or contact lenses -- don't exist. The technology to create them seems overwhelming. Moreover, vendors have been trying to get users to put on goggles for at least 15 years now, and users just aren't interested. Users don't want to put stuff on their heads so they can look at the computer. Still, technology often has to take several runs at the marketplace before it catches on: Vendors introduced many handheld computers in the 1990s before PalmPilots and, later, smartphones finally caught on. So maybe goggles will catch on next time around.

You don't need to have an eye-mounted display to achieve the benefits of reality augmentation., Imagine something like Google Street View on your GPS-equipped smartphone. Stand in front of a building on a downtown urban street. Look at your smartphone and see an image of the same building. Tap on the image and see information on all the businesses that are tenants in that building, with links to their Web sites, phone numbers, reviews of retail establishment, Standard & Poor ratings, blog posts and newspaper and magazine articles about them, YouTube videos, and more.

Another possible way to achieve reality augmentation would be wall-sized displays, like in the movie Minority Report. Lassonde and I talked about that over drinks after the panel discussion Monday. You'd be standing around in a reception at a business conference, like the InformationWeek 500, only some of the people you're mixing with aren't physically there at all. they're life-sized avatars, displayed on a wall-sized display. Likewise, Lassonde said, companies might line their office corridors with these displays, creating a virtual connection between multiple locations spread worldwide.

The first crude ancestors of these wall-mounted displays are present today as telepresence conferencing systems. The current generation costs tens or hundreds of thousands of dollars, and you often have to dress up a whole room, with precisely positioned chairs and cameras and microphones and speakers to create the illusion that people are physically sitting around the same table in the same place. But, over time, we can expect the systems to be cheaper, more flexible, and more portable.

You can imagine mixing virtual worlds with reality augmentation, to bring elements of the real world into the virtual world, and elements of the virtual world into real life, with people, avatars, buildings, rooms and furniture that are only virtually present, but appear to be real (until you try to touch them).

All these technologies will have a transformative effect on our lives, and how we interact with technology. We'll no longer talk about being "on the Internet," or "away from our computers." Many of us will be connected all the time.

I think we're going to see all this within the next quarter-century or so. It may sound pretty far-fetched -- but think about the world of 25 years ago. It looked a lot like the world of today, except no cell phones, DVD players, TiVo, iTunes, iPods, Web, blogs -- and the number of people on the whole Internet then was lower than the number of regular Second Life users today.

Moreover, we won't have to wait 25 years to see the first result. I think 2008 will be the year of virtual worlds. In the summer of 2008, in particular, we'll start hearing a lot about virtual worlds -- the way we heard about social networks and Facebook this past summer. Everyone will be joining virtual worlds, spending a lot of time on them, talking about them, and reams of articles will be written about them. It will seem like everyone is doing it (although in fact, as with socnets today, it'll just be a vocal, connected minority who are hooked up).

What do you think? Have I created an accurate prediction of the future? Or have I been watching too many episodes of the Jetsons?