Microsoft said to invest in Android maker Cyanogen

Microsoft has invested in Cyanogen, producer of an alternative distribution of Android, according to a Wall Street Journal article published Thursday.

Cyanogen is the principal backer of the popular, open source CyanogenMod distribution of the Android operating system, which is used in the OnePlus One smartphone. The company also makes Cyanogen OS, a commercial Android distribution found in smartphones built in India by Micromax, including new models selling under the brand name YU. On its site, the company touts the OS as being “known for its revolutionary personalization features, intuitive interface, speed, improved battery life, and enhanced security.”

The Journal cited unnamed sources familiar with the transaction. It did not provide comment from either Microsoft or Cyanogen. Cyanogen did not respond to IDG News Service’s request for comment by press time, and Microsoft declined to comment. Microsoft would be a minority investor in a roughly $70 million round of financing, the Journal reported.

News that Cyanogen was seeking a new round of financing, and that Microsoft officials had met with the company, was first reported last August by The Information. That article referred to Cyanogen as an “obscure Android software firm.”

Since that time, Cyanogen’s outspoken CEO, Kirt McMaster, has done everything he could to prove the first word in that headline inaccurate. At a developer event in San Francisco last week, McMaster was widely quoted as having announced to attendees: “We’re attempting to take Android away from Google.”

McMaster explained his pronouncement by saying Android should return to the principles on which it was founded, including independence from single-vendor control as well as from any one company’s suite of apps.

CyanogenMod reportedly exceeded 1 million active users worldwide at the start of 2012, and by the end of the following year claimed 10 million. It’s not market share that makes the company or its open source contributors compelling, but rather Cyanogen’s bold effort to enable smartphone manufacturers to deploy Android without having to rely upon Google-branded resources such as Google Play.

It’s uncertain what Microsoft may gain from such a deal, other than the feeling of giving Google another kick in the pants. But Cyanogen enthusiasts have shared their theories since rumors of a deal first spread. Some say Microsoft could benefit by either collaborating with some of Cyanogen’s talented programmers or hiring them, and thus benefitting without having to absorb the company outright. One other theory has Microsoft building its own cross-platform apps store, giving the Microsoft brand a beachhead in a territory otherwise dominated by Google. (Microsoft did release a new Outlook Preview app for Android Thursday morning.)

IDC analyst Al Hilwa believes that Cyanogen’s talent could certainly help improve Windows Phone down the road. But that’s no guarantee of Windows Phone’s future success.

Hilwa doesn’t think Microsoft should be interested in acquiring the CyanogenMod or Cyanogen OS platform for itself. “If developers have to do extra work for another platform, including a significant amount of testing, they still would tend to hesitate to support low market-share platforms. It does, however, reflect a newer thinking at Microsoft, in terms of letting the different products go after their markets more independently,” said Hilwa.

Ross Rubin, a Reticle Research analyst, notes that if Microsoft were truly interested in becoming an Android vendor in its own right, it would not have discontinued Nokia’s X series smartphones shortly after it acquired Nokia.

“But as [Microsoft] gets more aggressive about putting its services on other platforms, it could see Cyanogen as a means of distribution for services such as Office 365, Outlook, and Skype,” said Rubin.