Battle of the Digital Ecosystems

This year's Consumer Electronics Show (CES) had a few themes to take away, but the one that seems to define the rest is that the old model is dead. We are firmly at a new frontier of technological development, and whatever new age we're entering, it's being shaped by Apple Inc. (Nasdaq: AAPL). Everyone else seems to still be struggling out of the rigid digital ecosystem developed in the 1980s.

For example, Kurt Smith, a VP of Verizon Communications Inc. (NYSE: VZ), believes a mature supply chain requires three levels: the content creators/manufacturer, the distributer, and the retailer -- for no other reason than that's the way it's always been done.

Verizon is already behind. This is a lag built upon a generational gap that we can only vaguely understand. For those of us who didn't grow up with the Internet, the texting of the newer generation is confounding. Worse, today's toddlers are using iPads in the cradle, so in 10 years the gap will be even larger and more confusing.

And yet, the majority of the panel sessions at CES were filled with old white men. I saw no minorities on the panels. There were two women in the sessions I attended, one older woman who wasn't even familiar with the panel she was moderating, and another who seemed more afraid of technology than anything else, a disturbing lack of diversity that didn't reflect the audience in any way.

On the show floor, it was shown just how this disparity is playing out.

George Haber, CEO of Cresta Tech, said, "If it can be done in software, it will." And to expand upon that, if your product can be replaced with software, it will be, and you're already behind in this new world. Additionally, this new ecosystem also revolves around a DIY generation: We install our own smart home products; we do our own plumbing; we fix our own phones; and we, the consumers, make hardware obsolete.

Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY) is one "victim" of this generation. At CES it showed a tablet that could be completely submerged under water. The downside: The tablet is much more expensive to buy, and if there are any cracks, it must be sent away for Fujitsu to fix. Meanwhile, a product like Liquipel is about $70 and does the same thing with a nano coating. A DIY solution vs. a hardware solution.

We've entered this new frontier because we've reached a tipping point in technology. When phones start having quad-cores it's time to admit the "device wars" are over. Other than some tweaking here and there with battery life and sound, how is a company supposed to differentiate itself? Enter, the digital ecosystem "wars."

The companies at CES reacted to this switch-over in varying ways. Sony Corp. (NYSE: SNE) brought nothing new or interesting to the table in terms of hardware. Instead, it focused on its own ecosystem in an attempt to show consumers how its software is better than Microsoft's or Apple's.

Nokia Corp. (NYSE: NOK) reacted to this switch-over with a sigh of inevitability. The new ecosystem is narrowing in on the digital home, which the Android and iOS have completely covered. Nokia never made inroads into that market, so it's done the only thing it could to set itself apart and to keep fighting as one of the largest phone manufacturers of the world: It partnered with Microsoft Corp. (Nasdaq: MSFT).

In the fight over you, the consumer, Nokia knows the ecosystem you'll chose eventually is the same one you'll ultimately use on your TV, your tablet, your smart home interface (which might be a gaming device, a tablet, a blu-ray, etc.), and your phone.

But maybe you've already chosen your ecosystem. Maybe, for you, the battle is already over. In which case, where is our Apple TV?