What does the future hold for bricks and clicks?

When the great and good gathered for corporate advisor Regent Associates' annual chief executive briefing, there was one phrase on everyone's lips - 'bricks and clicks'.

At the close of January, event speakers and delegates alike were debating a model much predicted but now dramatically set in stone by America Online (AOL), Time Warner and EMI merging online with offline.

Their enthusiasm is easy to understand. The UK's quoted dot com companies are now worth a collective £18 billion, according to industry watcher Richard Holway, a keynote speaker at the event. Traditional companies want a share of that action.

"It makes the simple task of turning water into wine child's play," said Kevin Lomax, chief executive of software giant Mysis, summing up the prevailing belief in the Internet's wealth-creation potential.

The great gold rush
Holway's prediction that dot com firms lacking a bricks and mortar infrastructure are heading for a rough time this year pleased delegates, most of whom come from traditional bricks and mortar businesses.

"In the Californian gold rush of 1849, it was the 'picks and shovels' suppliers that were the real winners," he observed.

Holway believes that future market leaders will be those with a hybrid strategy combining both online and offline operations, the so-called clicks and mortar strategy.

You don't get many water-into-wine kits in the supermarket, however, so how do you bring them both together?

"All I can say is that businesses must develop a strategy that incorporates offering services," said Holway. "Take Microsoft. Who would have thought that Steve Ballmer would announce that he plans to turn it into a giant online software services provider?"

Better to buy than build?
Bringing the two different economies together is clearly a big debating point. Peter Rowell, chief executive of Regent Associates, suggested that following AOL's lead, buy, not build might be the answer for many companies.

Last year, the value of acquisitions involving UK technology companies alone rose to over £140 billion, compared with less than £20 billion in 1988.

A huge increase, but put it into perspective: the figure is hardly surprising when considering the potential of business-to-business ecommerce for the technology industry.

Referring to research from analyst Forrester, Rowell predicted that revenue from computing and Internet sales in the US alone would reach over $1.3 trillion (£780bn) by 2003.

Consumer brand is the key
Click firms will need more than a good idea. IDC's research manager Iain Gillott predicted that one of the most critical factors guaranteeing both short and long-term success on the Web will be consumer brand image - something 'bricks' already have, with 'clicks' closing fast.

"When consumers were asked if they would buy telecoms services from Microsoft, they said yes, even though it has absolutely no history in this market," he pointed out. "It's a recognised brand that is deemed to be respectable by consumers."

The big hybrid winners in the UK will include Virgin and Marks & Spencer, believes Gillott. Both have already expanded their original brands to incorporate financial services.

Despite the criticism of Virgin's train services, its brand remains solid, says Gillott. This 'halo effect' is what businesses wanting to meld bricks with clicks must focus on.

A brave new world?
The transformation of modern industry through the New Economy doesn't stop at bricks and clicks. Ian Angell, professor of information systems at the London School of Economics, hazarded an idea as to what was next.

"In the future the enterprise will be a loosely knit alliance of global networks - electronic, transport and human. It will relocate to where the profit is greatest and the regulation least," he said.

"It will be a brave new world - a Barbarian manifesto."

If you want to be one of the 'Conans' of that world, you shouldn't waste any time.