By Scott Hillis

SAN JOSE (Reuters) - When Cisco Systems decided to enter the Second Life virtual world, things didn't turn out exactly as the network equipment supplier expected.

"We were quick. We got into Second Life and put up a big building with repurposed Web content. It was a ghost town. Digital tumbleweeds," said Christian Renaud, head of Cisco's networked virtual environments.

It turned out people wanted to log on to Second Life to hang out with friends and play casual games, not visit a 3-D version of a corporate Web site.

It's an experience many companies that rushed to set up in Second Life have had in recent months, but rather than abandon its virtual homestead, Cisco changed tack.

"Two or three months in we bulldozed everything we'd done. It's now a place for meetings rather than repurposed Web content," Renaud said.

Privately-owned Linden Lab is the operator of Second Life, which lets companies create open as well as private areas.

Instead of constantly swapping e-mail or holding conference calls, Cisco employees around the globe can interact with each other, customers, partners or trainers in the company's Second Life offices.

Instead of declaring virtual worlds a failed experiment and pulling out, companies are rethinking their approaches, much as they did on the Internet a decade ago, when Web sites began evolving from little more than a few pages with brochure-style photos and information.

Some $200 million in investment has flowed to virtual world companies over the past year, and many of the three dozen or so efforts are focusing on corporate uses.

"We know enterprise folks are looking at this primarily as a communication medium," said Chris Sherman, director of the Virtual World Conference that kicked off on Wednesday.

"The first iteration of virtual worlds saw Second Life as a platform of choice, for experimental purposes. Now in the second iteration we're seeing new platforms as well," Sherman said, referring to other virtual worlds.

The conference schedule reflects the shift, with sessions focusing on what went wrong with initial corporate forays into virtual worlds, how large businesses should use them, and how to manage employee behavior in a medium where inhibitions can quickly melt away.

"There are things we need to do behind the corporate firewall. I don't want to have an HR discussion or a legal discussion in Second Life," said Ian Hughes, a virtual worlds promoter for IBM.

A virtual meeting space, Hughes said, is a good replacement for a telephone conference call, which typically has a lot of "dead" time at the beginning as participants dial in. A virtual meeting emulates a real one, giving people a chance to mingle.

Hughes reckoned that IBM, with 330,000 employees worldwide, could recover more than 9 years' worth of wasted time every week by replacing all conference calls with virtual meetings.

Examples of companies focused on the corporate aspect of virtual worlds include Forterra Systems, Millions of Us, The Electric Sheep Co, and Unisfair. Some help clients get set up in Second Life while others build boutique virtual worlds that may never get exposed to the public eye.

"If you create an island in a virtual world, you have to allocate a representative amount of money to drive people there. If not, there will be cobwebs in your space," said Brent Arslaner, head of marketing for Unisfair, which sets up virtual rooms for corporate meetings, conferences and training events.

The entertainment industry is also adapting, drawing up complex storylines that flit across television, computer and mobile phone screens.

The hit CBS show "CSI: Crime Scene Investigations" plans an episode later this month where a killer is pursued into Second Life. Viewers can continue the chase from within the world, or try a few other games related to the show.

"There's been a lot of negative press about Second Life lately," said "CSI" creator Anthony Zuiker. "I think that's because a lot of companies are cutting big checks into Second Life and there's no real application in mind."

© Copyright 2007 Reuters.

Photo:
A computer grab, taken February 20, 2006, shows a location in the virtual world Second Life. Instead of declaring virtual worlds a failed experiment and pulling out, companies are rethinking their approach, much as they did on the Web a decade ago, when sites began evolving from little more than a few pages with brochure-style photos and information. REUTERS/Second Life