Microsoft Reportedly Investing in Android Startup Cyanogen
A single investment by Microsoft might radically alter the landscape for Android devices forever. That's because the object of its affection, Cyanogen, has promised to take the open-source mobile operating system away from Google.
News of the potentially revolutionary development comes courtesy of The Wall Street Journal’s Digits blog, which reported on Friday that Microsoft would participate in a $70 million equity round for the one-year-old company. The paper quoted people familiar with the matter. Microsoft’s participation could open the way for a version of the Android OS that is more compatible with Microsoft apps.
Not As Open As You Think
In some ways, the investment would appear to be counterproductive for Microsoft. Cyanogen develops CyanogenMod, a derivation of the Android system that contains features and options not included in the source code provided by Google. Phones running CyanogenMod would compete with handsets running Microsoft’s own Windows Phone operating system.
But the reality is that Windows Phone devices make up only about 3 percent of the smartphone market, a drop in the bucket when compared to Android, which commands 84 percent of the market. If Microsoft is serious about improving the position of its apps in the mobile market, Android is the main platform it will have to deal.
That seems to explain the strategy behind the reported investment. For all of Google’s talk that Android is a fundamentally open source project, access to the platform has come with strings attached. In fact, Google has required that handset manufacturers feature its own apps in exchange for access to its ubiquitous search service. Google has also insisted that its search tool be set as the default.
Those limitations have irritated device makers while putting Microsoft at a competitive disadvantage when it comes to getting its own mobile apps into users’ hands, or getting them to use Bing, its proprietary search engine.
Breaking Google’s Grip
Joining forces with Cyanogen, meanwhile, offers the opportunity to break Google’s grip on the mobile OS market. Although Cyanogen only has 80 paid employees, around 9,000 volunteers are working on developing its version of Android, according to the company. If Cyanogen were able to establish itself as a third viable mobile platform that can compete with Android and Apple’s iOS, Microsoft could have an easier time bringing more its mobile apps to more users.
Microsoft will not be the only investor participating in this financing round, according to the Journal. Other companies have also expressed interest in investing in Cyanogen to counter Google’s influence in the market.
However, those other investors have not been identified. It is also unclear how much of a stake Microsoft will take in the company, although Bloomberg News reported that the latest round could see Cyanogen valued as high as $500 million. The company has previously raised $100 million.
Posted: 2015-02-01 @ 12:48am PT
"The enemy of my enemy is my friend."
Good one, MS.
Posted: 2015-01-31 @ 4:56pm PT
Microsoft is learning a lesson from Google's book and giving Google some of its own medicine. Nice! Consumers will be the ultimate beneficiaries of this increased competition. Well done, Microsoft.