Thursday, December 24, 2009

If Forterra Systems and Metaplace have sparked a virtual world industry shakeout, the question is: Who's next?

So, unless you've been living in a virtual cave (and given our audience, that's actually a possibility), you probably heard the rumor this week that Forterra Systems laid off 60 percent of its staff, put its assets up for sale, and is shutting down.

A day after ThinkBalm analyst Erica Driver broke the rumor on Twitter, Metaplace announced it was closing its doors. Driver has since verified that Forterra Systems has, indeed, conducted a massive layoff.

Forterra burned through tens of millions in venture capital, yet could not achieve critical mass. Ditto Metaplace, which also burned through millions before folding.

What in the virtual world is going on? Industry observers, including ThinkBalm's Driver, agree: The virtual world industry shakeout has begun. Driver tweeted, "I expect to see more shakeup in this emerging market in 2010-2011."

Now, before I share my broader view of what these unfortunate events mean for the industry, users, and evangelists, I want to first speak directly to ProtonMedia's customers and prospects.

Our 2009 experience could not be more different from Forterra's and Metaplace's (and frankly, from where I sit, all of our competitors). We are emerging from 2009 stronger than ever. We are profitable. Our sales are up 20 percent year over year. We hit our numbers. We sold more ProtoSphere seats than ever before. Our pipeline is robust.

And we are now the #1 virtual world in life sciences, by any measure -- customers, deployments, seats, users, revenue.

Moreover, consider that we accomplished all of this during the worst recession in U.S. history. This economic pressure surely contributed to Forterra Systems' and Metaplace's troubles, and continues to threaten the existence of several other players who shall remain nameless for the purposes of this post.

Imagine what ProtonMedia could have achieved were the economy robust. This success, which I dare say is dramatic given our times and the emerging nature of our industry, speaks to ProtoSphere's ability to deliver on the promise of enterprise virtual worlds. You need look no further than our enterprise virtual world case studies to see the metrics for evidence of this.

I am planning a detailed post on our 2009 accomplishments, so you can see how much we have achieved, how far we have come over the past 12 months. The credit goes to you, our customers, and our employees, investors, partners, and executive team. Your feedback, input, requirements, demands, and deployments helped make ProtoSphere the platform it is today. And it is driving our upcoming 1.4 and 2.0 releases.

I'll also cover some of the decisions about technology, design, and human factors that I believe proved crucial to our surviving, if not thriving in, this incredibly challenging year.

Back to the troubles at Forterra and the demise of Metaplace. In any emerging technology space, competitors often become friends. In Forterra's case, I know many of the people who worked there. They're a talented and creative group. And they have been a formidable competitor, despite the fact they have been unable to achieve critical mass with sales.

Metaplace was a Web-based consumer play. They also failed to find a way to profitably monetize their platform. This is a pattern we see again and again among consumer virtual worlds. It's the reason why even the most popular of consumer worlds, Second Life, is eying our enterprise world market.

But as Forterra's experience shows, you can have what appears to be an excellent 3-D virtual world, and still fail to find your footing in the enterprise. The 3-D wizardry that wows consumers doesn't count for much when you're sitting across the desk from a vice-president of sales logistics or R&D at a global life sciences company.

They have real business objectives to attain, tough requirements to meet, and KPIs that every deployment lives or dies by. And they don't want to be one bug or hack away from the inappropriate (i.e., adult) content that permeates many, if not all, consumer worlds. I don't mean to sound harsh, but the reality is, this is where the consumer toys are separated from the enterprise tools.

And this is where we believe ProtoSphere provides a true competitive advantage to our customers. Perhaps that's why ReadWriteWeb dubbed ProtoSphere "the most advanced collaboration environment."

If the crisis at Forterra and death of Metaplace do signal a coming shakeout, that's a good sign that the age of the business avatar is upon us. At a personal level, it's sad to see these companies fade. But in the end, it's a positive for everyone who believes in the value of enterprise virtual worlds.

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