HyperGrid Business has a good guest post from Chris Ravenscroft about why Second Life Enterprise failed. Ravenscroft was a client of Enterprise, a now-defunct project from the Mark Kingdon era of Linden Lab. Short version: It wasn't ready for primetime as a true business application, it was too expensive (between $50,000 and $100,000 for the first year!), it was offered as a behind-the-firewall solution, "which meant keeping customers’ employees off the grid". But above all (and I think this is really the crux): "It is now obvious that Linden Lab’s proverbial heart was never really in the whole endeavor."

Like I wrote when the Kingdon era ended, the push for Enterprise was driven by The Dwight Schrute Echo Chamber: "Adamant denial (despite all evidence to the contary) that SL is a primarily a game and entertainment platform, and a reflexive insistence (despite little evidence to the affirmative) that Second Life is best used for real world work." Enterprise was an attempt to force what is basically an entertainment/play space to wear an uncomfortable business suit -- no wonder the Linden corporate culture couldn't feel the love. Anyway, read Ravenscroft's take here.