Report: Virtual Worlds for the Enterprise Market

1Executive Summary

Enterprise 3-D virtual world applications have proliferated during the past several years. What began as fun and games is becoming a serious business with a lot of upside. A host of new, innovative 3-D virtual world applications have been introduced to the marketplace targeting the enterprise. Some of these applications have been created by established technology companies, such as IBM, Sun Microsystems and Nortel, while others are being developed by emerging players, such as Forterra Systems, ProtonMedia, Qwaq and Unisfair.

The following is a list of selected companies that have developed, or are developing, 3-D virtual world enterprise applications [1]:

The enterprise 3-D virtual world applications market is already competitive as vendors vie for early leadership positions. We expect many more products to be launched in the future, along with a host of supporting 3-D technologies. However, 3-D technology is in its infancy today, and several of the products discussed in this report are only in their beta stage of development. Before we delve deeper into the aforementioned companies and their 3-D virtual world enterprise applications, we might ask the following questions: Why pay any attention at all to this space? Isn’t the virtual enterprise old news? Aren’t there a host of applications already in the marketplace that facilitate the functioning of virtual enterprises?

Although there are currently more than 1 billion people using Internet technologies, this usage almost exclusively entails exchanging messages, browsing content, and posting and reading static content. Investors are aware of excitement and valuations afforded to companies like Facebook that are simply aggregating a broad set of information types and enabling better sharing. We also see the seeds of real-time, rich Internet applications in the form of video. But these are just the proverbial tip of the iceberg. The current Internet experience is stuck in a bandwidth-constrained, 2-D environment, which is far more limiting than the rich, interactive, 3-D virtual experiences that we believe will emerge in coming years. These immersive 3-D experiences will be vastly superior to anything in 2-D.

The technologies behind the Internet and web are growing more powerful with advances in hardware and software. This allows people and companies to utilize and employ more powerful applications in their jobs and lives. The bottom-line justification for 3-D virtual enterprise applications is this: They have the potential to boost productivity and profitability. There have been efforts by researchers to quantify the boost to productivity and profitability associated with 3-D virtual enterprise applications. This activity is important, but it should be noted that experience with powerful technologies shows it often takes many years for the full effects to be seen.[2] There is also a quantifiable “green” benefit associated with the growing use of these applications in the enterprise – a benefit that appears to be increasing in value in both financial and social terms.

We would answer the other two questions by noting that the virtual enterprise has come into prominence as the Internet has evolved over the years. It is true the virtual enterprise is not a new thing. However, the productivity and profitability of virtual enterprises have been constrained by the relatively primitive nature of available applications and the underlying hardware, software and networking infrastructure. Advances in technology will create powerful enterprise applications that allow people to collaborate and interact in much more productive ways than they do today, propelling the virtual enterprise to another level.

The 3-D web environment fosters collaboration in ways that are far superior to 2-D web environments, and that is one of the key attributes of 3-D virtual worlds. We see the volume of interactions on the web soaring in the future in parallel with the evolution of 3-D technology. The types of networking activity seen with Facebook, MySpace, LinkedIn and other such products are primitive to what we expect to see in coming years. 3-D technology opens the door to new business models and new ways for organizations to network and collaborate. The key difference will be a visceral shift that comes in the form of shared experience versus the sharing of information.

To answer the final question above, we would point that there are a host of applications in the marketplace that facilitate virtual organizations. We use some of them in our business today, as do millions of other people. Many of these technologies have allowed people and companies to increase productivity and profitability in ways not conceived only a few decades ago. However, we believe it is fair to say that the applications in today’s market are relatively crude compared to what will be unveiled in the months and years ahead. We believe they will evolve in much the same way the current Internet evolved from very basic HTML pages (Netscape) to “dynamic” web sites (Yahoo!) to e-commerce (Amazon.com) to the platforms (Google) of today.

Virtual world technology enables people in disparate physical locations to come together in one place for the purpose of collaboration and communication – more effective collaboration and communication, to be precise. We believe the usage of 3-D virtual environments will rise dramatically in the future, as organizations are increasingly tasked with finding ways to increase productivity and profitability. Thus, we believe there is a clear-cut case to be made for 3-D virtual world applications in the enterprise space. In the remainder of this section, we will take a closer look at selected companies and their applications geared toward facilitating increased productivity and profitability in the enterprise. We conclude this section with some big-picture thoughts about the current size and future growth of the 3-D virtual world application enterprise market.

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