Meet me in my avatar's office

That's if IBM's vision pans out.

"Success (in the future) will depend on how well you play the game, literally," Doug McDavid, executive research consultant at IBM's Academy of Technology, said here Monday night at an SDForum event titled "Virtual Worlds: Ready, Fire, Aim."

"A generation (has) lived in these environments, and they'll bring that perspective into the workplace. How this plays out is in the integration of work with this playful perspective," McDavid said. He added: "This is an unstoppable phenomenon."

IBM's McDavid and Dave Kamalsky of the IBM Almaden Research Center were the main presenters at the nonprofit SDForum's first meeting on the business of virtual worlds.

IBM certainly has a growing stake in the future of those online spaces. Evidence of the software giant's commitment to R&D for virtual worlds came this week when it announced a new social-networking tool for the enterprise. Called Lotus Connections and expected out later this year, it aims to help people find colleagues of similar interests, among other things, in virtual worlds.

Still, audience members at Monday's event expressed doubts that the corporate world, or the general public for that matter, was ready for a virtual space in which co-workers' avatars, or digital self-representations, could be naked versions of themselves.

"The only thing that matters is what consumers are ready for," one audience member said.

To be sure, if corporations widely embrace virtual worlds for business and employee relations, issues like security and privacy will surface. For example, residents of Second Life can represent themselves as dragons, the opposite sex or nudists. "That alone is a very deep issue--does there need to be a code of conduct for employees?" asked IBM's Kamalsky.

"We're looking at security and privacy, but obviously we can't control the servers at Linden Lab," he added. "But we try to disclose that up front in these service agreements."

Yet IBM envisions many businesses and nonprofits thriving in virtual worlds. Marketers can use the so-called metaverses to project a cool image of products, and retail outlets can use them to sell real-world goods. Lawyers, accountants and real estate agents could also set up shop in virtual worlds to meet with clients informally.

Virtual employee meetings and business teleconferencing could also benefit from the fact that virtual-world avatars can express emotion and gestures, adding life to otherwise remote events. In fact, IBM's McDavid said virtual worlds could ultimately be more of an affront to the airline business than teleconference services like WebEx. "A lot of this is a change of mindset," he said.

McDavid compared the rapid evolution of virtual worlds to the early days of the Internet, considering that interactive virtual worlds have come from nowhere to draw interest from celebrity bands such as U2, news agencies like Fox and CNET Networks (publisher of News.com), and academic institutions like Harvard University. "Virtual-world years are to Internet years what the Internet years were to real years. Things are happening so fast," he said.

Interest from IBM, for example, has morphed from a handful of employees researching the sector in 2006 to the company owning more than 12 islands on "Second Life" and as many as 2,000 employees registered as participants.

Welcome to IBM Island
Last April, the company started buying just a few islands in Second Life, and then developing those internally. In the summer, it launched its Forbidden City and Wimbledon islands, along with a digital community called 3D Jam, where employees could "jam" about ideas with family, partners or co-workers.

In October, IBM unveiled its "Global Connections," giving IBMers a virtual island where they can interact with company alumni. A month later, it bought 12 islands, including one that's become a virtual test store for Circuit City. The store gives shoppers a lounge-like experience of the retailer, with displays for the iPod and couches for sitting and gauging the right proportions of a new TV. Shoppers' avatars can then click to buy products at Circuit City's real online store.

This month, IBM introduced a prototype store for Sears, as well as its own island, Lotussphere, where clients can interact with IBM employees about Lotus software. And next week, it will take the wraps off its Australian Open island, where onlookers can watch the trajectories of balls hit in the actual sporting event or choose to see the game from the vantage point of an individual player, according to IBM.

Why is IBM so invested in seeing the virtual world succeed? Because, McDavid said, the company wants to attract and keep talented employees.

A generation of kids reared in virtual worlds like Second Life or MTV's Laguna Beach are eventually bound for a work force that will need to cater to their experiences by creating virtual worlds for the corporate intranet.

Economically, too, the world is migrating to a services economy, McDavid said, and it's all about people working together in these open, collaborative ways.

"The turning point has to do with the balance between individual and social interests within capitalism," he said. "It is the swing of the pendulum from the extreme individual...to giving greater attention to collective well-being."