Cyanogen this week announced the completion of a follow-up round of Series C financing that brought US$80 million in new funds to pay for more hiring and accelerated development of its open platform software development kit.
Premji Invest led the round, which included some key new investors, such as Twitter Ventures, Qualcomm, Telefnica Ventures, Smartfren Telecom and Index Ventures. Among Cyanogen’s other major investors are Access Industries, Rupert Murdoch, Vivi and Nevo.
Cyanogen is committed to liberating the Android OS from the financial grip of Google. Its CyanogenMod firmware adds considerable personalization features and improvements to the Android platform.
Cyanogen has spurred a developing secondary app market for an alternative Android distribution based on its mods.
“Our round of investors believe in what we’re doing in opening up the Android platform and creating a more open, level playing field for the mobile ecosystem of developers,” said Cyanogen spokesperson Vivian Lee.
“Cyanogen is in a great position to become the third leading mobile OS,” she told LinuxInsider.
CyanogenMod is just one aspect of the company’s push to overtake Google’s Android superiority. Cyanogen previously announced plans to launch an Android-based phone devoid of any Google services in a partnership with Blu — and rumors of its own replacement app store persist.
“Google Mobile Services is a great set of services. What Cyanogen is advocating is enabling and offering more choice to mobile users in choosing their default apps and services,” said Lee.
That promise of an alternative mobile OS is partly responsible for the strong interest on the part of high-profile investors, noted Charles King, principal analyst at Pund-IT.
“As Android has grown and evolved, interest in a version of the OS that would be developed and updated outside of Google has continued to grow and take shape,” he told LinuxInsider. “The investors believe there is a profit to be made from that effort, so they are climbing on board the Cyanogen bandwagon.”
Cyanogen differs from other Android distro developers in that it considers itself agnostic. It will work with virtually any third party that has little or no interest in Google’s services or app ecosystem, King explained. That is notably different from Amazon, which attempted to leverage Android to build a proprietary device and app ecosystem to rival Google’s Play Store.
In some developer communities, negative reactions toward Google rival the disdain usually reserved for Microsoft.
“Given the complaints about Android being too generic and too difficult to differentiate on, [CyanogenMod] could be a game-changer for Android phone and tablet makers,” said Rob Enderle, principal analyst at the Enderle Group.
The Kindle tablet line has been successful, he noted. It’s an option for folks who want to go the Kindle route and create a well-differentiated Android alternative, he told LinuxInsider.
Cyanogen’s backers “potentially have another powerful platform with the legacy of Android and app support but without the Google headaches,” Enderle said. “However, Google could decide to change their license, and that could cripple this effort — so there is risk.”
Another challenge facing Cyanogen is that its strategy targets markets where smartphone margins are already razor thin, said Pund-IT’s King. So pricing for products and services is likely to be constrained.
“That said, if the company or its backers can position it as a preferable alternative to Google, they could gain official governmental approval that would positively impact their bottom line,” King suggested.
Cyanogen has drawn a lot of interest because of what it represents. A large volume of Android phones sell without any Google services, especially outside the U.S. and EU, according to Wendell Adams, CEO of AB Mobile Apps.
“Software companies want to expand. Phone manufacturers are getting squeezed on their profits, and they are having a harder time differentiating themselves. Lastly, there is not a good reliable fork of Android,” Adams told LinuxInsider.
If Cyanogen can build a fork that mirrors many of Google’s APIs, then app developers easily can push to Cyanogen-based mods. Amazon’s Fire Phone poses many problems because of its different APIs and structure, he explained.
“Allowing other services to put apps on Cyanogen — [and] other software companies like Dropbox and Microsoft — can really make a difference and become the default,” said Adams. “This allows manufacturers to differentiate and make some profits. Similar to bloatware on computers, this could be a way for a phone manufacturer with slim margins to turn a profit.”
Money Factors Heavily
Mobile tech needs to be a moneymaker for developers. It is the primary way people around the world access the Internet. So if Google is going to exist in the long term, it needs to be the primary choice of users for convenience, Adams said.
Firefox’s shift to Yahoo as the default search engine cut into Google’s revenue share by 2 percent. Android without Google could mean a massive hit in the company’s market share and bode ill for its future, he suggested.
“Google Now, for instance, is an attempt by Google to get you further reliant on the Google ecosystem. With the Google Now API opening up for app devs, it poses a serious risk to app developers and a great opportunity for Google to learn about its users,” explained Adams.
The risk for app developers occurs if Google provides information it takes from your app, he noted. Then people have less of a reason to go to your app. When Google starts providing information in its search results from websites, then clicks to those websites can drastically go down.