A penguin has been showing up at Cisco Systems' public events lately. It never causes a disturbance but sits quietly and listens to presentations on routers, optical networking, IOS software, or whatever the topic happens to be. It's the only penguin in the room--everyone else is human, although some are rather eccentrically dressed--but no one gives it a second look.Welcome to Cisco's headquarters in Second Life, Linden Lab's immersive technology platform that's the ultimate enabler of personal fantasy. Originally the stomping ground of gamers and technical hipsters, this 3-D virtual world has taken on some of the blander characteristics of the Mall of America. Adidas, Circuit City, Dell, IBM, Sears, and Toyota have all established beachheads there. And depending on your point of view, Second Life is either an exciting precursor of how we'll be conducting business in coming decades or the ultimate exercise in corporate flat-footed dunderheadedness.

"What the useful application will be for business is the million-dollar question," says Bob Moore, a member of the research staff at the Computing Science Laboratory at Xerox Palo Alto Research Center, who studies virtual worlds. "A lot of it is just plain hype. We see corporations are excited about it ... but the jury is still out about the real business value."

(click image for larger view) Circuit City's echo chamber View the Second Life image gallery

Grand Plans, Negligible Results
Second Life, an Internet-based 3-D "metaverse" launched four years ago, boasted more than 3 million registered residents by the end of January. Users create alter egos, called avatars, to represent themselves. Avatars can range from faithful representations of themselves to complete fantasies that bear no relation to the human form. They can walk, run, sit, fly--even have sex with one another. Residents can own property, build houses, open businesses, and buy and sell products and services. Although typed messages are still the prevalent mode of interacting, the emergence of VoIP is making it possible to communicate using speech. Unlike many other massive multiuser games, there's no script--players interact how, when, and with whomever they choose.

Companies that have entered Second Life have made grandiose predictions about how some of the biggest design, marketing, and sales challenges in the real world are about to be solved by the virtual one.

Having trouble understanding what your customers really want in a pair of jeans? Let them design the jeans personally. Ditto a car. Or a new kitchen. Want to increase brand awareness? Open a storefront where shoppers can virtually browse your products, "engage" with them, and become more loyal. Hope to convert browsing into real dollars? Add a link that sends them to your Web site, where they can hand over their credit cards.

It sounds good. The problem is that none of this is happening. The virtual stores are empty. The design simulations are kludgy and represent the ultimate exercise in pointless boredom for users who want to indulge their ultimate fantasies, not decide between olive green and stainless steel for a new refrigerator.

And about designing those jeans--or shoes or cars or furniture--that can then be translated into real-world products and sold: This is an unlikely prospect in a world where people aren't particularly interested in creating faithful representations of their real lives.

"It remains to be seen if boring convention will take over from escapism and whether the two can coexist, much less result in real-world results," says Gartner analyst Steve Prentice.

"It's definitely not yet a mature commercial environment," says Joel Greenberg, senior planner with advertising agency GSD&M, which handles accounts for AT&T, Chili's, Southwest Airlines, and Norwegian Cruise Line. "Your ROI isn't going to be based upon sales but on other factors." Greenberg has yet to interest any of GSD&M's major accounts in establishing Second Life sites. They're "confused and resistant," he says. Besides not knowing what Second Life is, they don't like the relatively small audience, Greenberg says. "They're used to being mass advertisers, not marketers to limited communities, and there's a fundamental difference in that approach."