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Cyanogen plots to unseat Google s platform
Aug 8th 2015 | PALO ALTO
KIRT MCMASTER has the right stuff to be a successful software boss. He talks a
mile a minute with a booming voice. And he projects inevitability: We re
creating something everybody wants. But communication skills are not the only
reason why his firm may succeed where others, including Amazon and Samsung,
have failed: establishing a third mobile-computing platform to compete with
Google s Android and Apple s iOS, which have market shares of 78% and 18%
respectively.
Most previous efforts to launch a new mobile platform were controlled by a
single company or a consortium, so they were either supported by few others or
were hampered by complex decision-making. What is more, new operating systems
require makers of apps to rewrite their programs a costly undertaking with an
uncertain outcome. Cyanogen has avoided these pitfalls, says William Stofega of
IDC, a market-research firm. It was born in 2009 as an open-source project. The
platform is fully compatible with Android but is also more customisable and
boasts more features, such as better privacy settings. Although installing it
is tricky and often voids the device s warranty, around 50m smartphone owners
worldwide have done so.
Mr McMaster convinced Steve Kondik, its founder, to turn it into a business in
2012. Initially, investors were reluctant. But Cyanogen has since raised $110m,
with several big Silicon Valley venture-capital firms getting involved.
Although Android is open-source too, Google s official version comes with
licensing strings attached. These have kept the platform from fragmenting into
incompatible versions but also serve to promote Google s app store and mobile
services, such as e-mail and maps, which allow it to sell advertisements and
collect user data. (The firm s chairman, Eric Schmidt, is a member of the board
of The Economist Group, which owns this newspaper.)
Cyanogen is best seen as an attempt to unbundle this package. Upstart
handset-makers, such as Micromax in India and Kazam in Europe, want to stop
competing mainly on price and tailor their products to specific markets, for
instance by integrating local mobile services. The model is China: most of
Google s services are banned or unavailable there and manufacturers use their
own Android versions, a big factor in the rapid rise of Xiaomi, a local firm.
Mobile carriers, for their part, would welcome more variety in handsets and a
less dominant Google; Telef nica, a global telecoms operator, participated in
Cyanogen s latest funding round. Makers of popular apps, such as Facebook and
Twitter, worry that Android will give Google an unfair advantage in mobile
services, where most of the industry s profits will be made; Twitter too is an
investor in Cyanogen. Poor countries could benefit as well: smartphones adapted
to local tastes are likely to spread faster.
Then there are the regulators, which have shown increasing interest in Android.
In April the European Commission began a formal investigation. This scrutiny,
says Mr McMaster, will keep Google from using hardball tactics against his
firm.
Micromax and a few others are already selling smartphones powered by Cyanogen;
more are likely to follow. Mr McMaster has also signed deals with several app
vendors, including Microsoft. It will make the mobile version of Office and
related services available on the Android clone.
Yet success is by no means guaranteed. It is unclear, for instance, whether
Cyanogen will be able to make much money: it intends to take a cut from the
revenues generated by the services it builds into its program. It may not be
able to do so without Google s mobile services, at least in rich countries,
where they are already dominant, points out Geoff Blaber of CCS Insight,
another market researcher.
Mr McMaster seems unfazed. His goal, he says, is not to replace Google s
services, but to create a level playing-field. But he is already plotting his
firm s next move: combining all the services built into Cyanogen and the data
they generate into clever new offerings, such as a field in a phone s dialler
app which tells users whether an incoming call is from a telemarketing firm,
based on feedback from other users. Google would not be able to do the same,
because many big service providers simply don t trust it, he argues. We are
the Switzerland of the mobile world.