Get a Second Life: the age of the Avatar has arrived

This time two years ago, Ben Verwaayen had never heard of social networking. But then the chief executive of BT came to Davos. Fast forward to 2007 and the phenomenon that spawned the likes of MySpace and Facebook has become a multi-billion dollar industry.

"Davos tells you about ideas and concepts and helps you to understand where trends are going. I heard about social networking way before anybody was talking about it. You can pick up pieces from Davos, glue them together and say "this is a trend we have to do", Mr Verwaayen said. BT quickly developed BT Podshow, a YouTube-style network that enables individuals, music companies and video production companies to share audio and video content.

If other bosses want to heed Mr Verwaayen's message, they would be well advised to get a life. A Second Life, that is. The player-controlled computer world and the virtual identities - or "avatars" - that inhabit it, is the hot talking point of this year's meeting. So far Second Life, which is owned by the US company Linden Lab, is a fairly niche concept: just 350,000 people regularly visit the cyber world, although almost 3 million people have tried it for size, but expect that to change rapidly. Segolene Royal, the French presidential hopeful, has an avatar, as does Nancy Pelosi, the Democrat speaker of the House of Representatives and the most important woman in the US.

Already such corporate titans as IBM, Nike and Sony BMG have set up virtual shop in Second Life because they have spotted the business potential that lies within the 3-D world. Given the amount of airtime that Second Life is getting here in Davos, it's likely that the number of big companies with a presence in the virtual world will multiply rapidly once the 1,000-plus corporate leaders who are here get home.

Running concurrently to this year's main sessions are a series of Second Life interviews conducted by Reuters, which has a virtual bureau inside the cyber world. Maurice Levy, the Publicis chairman, and Stelios Haji-Ioannou, the easyJet founder, are among those being quizzed in front of the Second Life inhabitants. It is part of the chairman of the World Economic Forum Klaus Schwab's initiative to catapult the forum into the digital era. Mr Schwab is a big fan of Second Life and has his own avatar; in fact, he is unique in that he hasn't had to re-christen his virtual representation.

George Colony, chairman of Forrester Research, the technology research firm, thinks companies can benefit from getting involved in Second Life in many ways. He notes that IBM's chief executive, Sam Palmisano, held a virtual company meeting in the cyber realm for the company's employees that have their own avatars. This worked out better than holding the meeting by conference call or using a video link-up, apparently. "IBM thinks it gets better interaction from its employees if it has a discussion in Second Life rather than on the phone," said Mr Colony.

Mitch Kapor, the father of Lotus and chairman of Linden Lab - a $11m revenue company that is expected to double in size this year - thinks Second Life could help the world to reduce its carbon footprint if more chief executives followed Mr Palmisano's example and used the virtual realm for corporate meetings instead of fly their directors around.

Users like Second Life because they can set up their own businesses and make real money: the universe has its own currency, the Linden dollar, which can already be exchanged into US dollars and will soon be convertible to euros. More than $600,000 changes hands between Second Life users every day. Linden itself makes money by selling virtual land.

Mr Palmisano has called 3-D realms such as Second Life the next phase of the internet's evolution; he believes they could ultimately have the same impact as the first web explosion. Another company that has embraced the concept of virtual worlds is MTV, which has made a virtual version of its hit show, Laguna Beach.

A host of web luminaries have already staked their faith in the concept by investing into Linden Lab, which is based in San Francisco. Pierre Omidya, the eBay founder; Amazon's chief executive Jeff Bezos; and Ray Ozzie, Microsoft's chief technology architect and the creator of Lotus notes, have all taken stakes.

Mr Verwaayen was not at the Davos dinner entitled "The Age of Avatars and Multiple Identities", but he's certain to have taken note of the buzz around Second Life at this year's meeting. By this time next year it's a given that plenty of companies will have made real money from picking up on the hot new trend of virtual realms.