By Gemma Simpson
Thursday, April 26 2007 07:11 AM
URL: http://www.zdnetasia.com/news/internet/0,39044908,62008499,00.htm

Businesses opening offices in virtual worlds such as Second Life will not see profitable returns from such tech-savvy ventures in the next three years.

While Web 2.0 is one of the hottest terms in tech circles, companies should limit substantial financial investments in virtual worlds until the environment stabilizes and matures, according to analysts.

Businesses will both lag behind consumer involvement and struggle to develop business models and define their roles in virtual environments in the next few years, according to analyst house Gartner.

Four-fifths of Internet users will have a 'second life' in a virtual world--though not necessarily in Second Life--by the end of 2011, Gartner forecasts.

Steve Prentice, vice president and analyst at Gartner, said companies should not ignore the growing phenomenon of virtual worlds as they will have a significant impact on business during the next five years.

Many business leaders dismiss virtual worlds such as Second Life as a game of no benefit to the enterprise and something to be banned for wasting computer resources and time, said Gartner.

Companies including the likes of Adidas, Dell, Reuters and Toyota have all opened offices in Second Life but none have converted their virtual presence into an effective, profitable sales channel, according to the analyst house.

Law firm Field Fisher Waterhouse became the first major U.K. law firm to open an office in Second Life yesterday.

Gemma Simpson of Silicon.com reported from London.