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Cyanogen, Android, and iPhone: The Future of Phones

Cyanogen logoCyanogen Inc. is hardly one of the best known companies in the mobile phone business. It is a recent outgrowth from CyanogenMod, a not much better known developer of Google-free versions of Android for mobile devices. And now it’s making a move to turn the Android Open Source Project (AOSP) into a challenge to both Google and Apple.

There have been three interests controlling most of the phone world–Apple, Google Android, and AOSP. The Google version, which includes a broad range of Google apps, is dominated by leading Android phone makers, particularly Samsung. The AOSP approach is used on millions of phones sold in Asia, especially China, by Xiaomi and many others (it is also popular with a minority of Google device buyers who want to install their own software).

Tough moves. Cyanogen is now planning a tough move into the market. Microsoft has shown itself to be a investor in the project spending perhaps $70 million, though it has not made a formal commitment. Amazon is another likely contributor. (Ina Fried has written an excellent report for Re/code.)

Amazon’s potential is obvious. It has been doing its own AOSP version for the Kindle Fire tablets and the unfortunate Fire Phone. It could almost certainly benefit by managing Android without leaning on Google. The Microsoft game is somewhat more dubious. One possibility is it is just looking for an OS other than Windows or Google Android for lower-end Nokia phones intended for third world countries.

The other is to play to the advantage of Windows Phone, which has struggled as a distant competitor for both Apple and Google. The logic, which is purely speculative about Microsoft’s intent, is that injecting a third, well-funded developer into the Google/iPhone battle could help create a better position for Windows Phone.

Unlikely problems. The  Cyanogen move is unlikely to cause problems for Apple. The iPhone is designed only for the upper part of the market–remember the lack of success of the iPhone 5c–while whatever Cyanogen offers is likely to be aimed primarily at the low end. The addition of a new OS is unlikely to have much impact on Windows Phones either.

The big issue is the entry of a new layer into the market of Google’s Android. The relationship of Android between Google and AOSP is a complicated affair. (( For more on the complications of Android, see Ben Bajarin’s The Android Schism. ))  At first, AOSP was attractive primarily to tinkerers who wanted to tamper with their phone software. They replaced the manufacturer-supplied software with CyanogenMod versions, which were offered for a wide variety of Android phones.

But producers of phones in the rapidly growing Chinese market were strongly attached to AOSP. They wanted to get a free OS and they had little interest in installing the Google services, many of which would not work on the Chinese network anyway. ABI’s survey found AOSP software was responsible for about 20% of the smartphones sold worldwide this summer.

Cyanogen could bring  some valuable stability to the chaotic assortment of software and OS versions being sold. But there is a question about just what Google does with AOSP while a new rival company does its best t0 take charge of the system. Google typically has made each new version of Android available to AOSP (Honeycomb, the short-lived tablet version was an exception).

Google’s interests. With Cyanogen trying to take charge, Google my be far less interested in helping. Google’s mostly unprofitable Android business has been to gain use of the services built in to the phones. But Google is already being hurt by the growth of the disorganized AOSP phone network and it could suffer significantly more if Cyanogen turns this into a real, competitive business. Android software is available free for any would-be user, but Google is not required to maintain it.

Of course, there are still a lot of questions about how Cyanogen will make this a real success. Right now, its only business is to provide software for Micromax, a maker of low end phones in India. It can provide a business of helping manufacturers get a more efficient operating system from AOSP, but it is hard to see how that can produce a whole lot of business.

But it certainly can contribute to the already growing fragmentation of the Android world. Google’s interest in Android has tended to cycle, hitting a peak with the acquisition of Motorola and at something of a low right now. Android’s market continues to grow significantly, but the biggest part of the expansion remains on the AOSP side while the top Google Android makers, led by Samsung, are hurting. Google should be worried.

Published by

Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.

114 thoughts on “Cyanogen, Android, and iPhone: The Future of Phones”

    1. The volume for the iPhone 5c was well below what Apple expected and they dropped the idea after a single issue. It wasn’t a total failure, just didn’t sell at Apple’s expectation. Probably the reason was that the difference in price was too small to appeal enough, while convincing Apple that hope for the lower part of the market was limited.

      1. “lack of success” is a bit harsh. Still, the astounding success of the 6/6plus + 5s line-up compared to the 5s + 5c line-up suggests that the 5c was a relatively weak offering. The fact that upon launch, Apple never had difficulty keeping the 5c in stock, suggest that it was not performing as well as Apple had expected.

      2. Not selling “at expectations” is not at all the same as a failure. All you are parroting is the internal product mix forecasts (which like all forecasts are just more or less educated guesses), not the actual total iPhone sales or profitability/margins etc. It is pundits’ expectations rather than Apple’s that the 5c was in any way an attempt to go after the “low end” market (<$500) that is at fault. It never was intended as that (see price point), nor has Apple shown any interest in that market (for very good reasons).

        The 5c was absolutely successful in many ways.
        1) It seemed to push more people to buy the more expensive 5S (hence product mix variation) while still pushing up overall iPhone sales.
        2) It also sold far better than the prior "low-end" phone (4S) in its position.
        3) It was also more profitable than the iPhone 5 would have been at the price point
        4) It freed up production capacity for the still fiddly milled Aluminium shells for the 5s (while maintaining economies of scale in almost all other components)
        5) For the consumer, it was also significantly better spec'd in the radios department (same LTE bands as a 5S (13+) – vastly more than the 5 ever had (1-4 depending on model).
        The 5c was absolutely a success and of course is still on sale now.

        I would also say that it is the perfect "starter" iPhone – absolutely "good enough" for any but power users, really lacking only Touch ID and an A7 (of little value to most users). Fully iOS 8 compliant (and probably 9). It is also available at fully half the price of an equivalent 5S in secondary markets for mint, in-warranty, unlocked models ($175-200 vs. $350-400). That is my go to phone when getting more family members into the Facetime/iMessage club. I've bought about 10 so far. I use one as my international travel phone and noticed precious little difference apart from touch ID from my usual US 5S.

        1. That is a bang up excellent summation of the reality of the iPhone 5c. I keep making those same points elsewhere but few people seem to be listening. So many are caught up in the false narrative from skeptics that the 5c wasn’t a success, or worse, that it was a failure, and they just regurgitate that without examining the actual facts.

          I’ll even add an additional point to the scorecard for the iPhone 5c: It gave Apple experience in simultaneously developing and releasing two brand new phones, which was the warmup round for 2015’s dual launch of both the iPhone 6 and 6 Plus.

          The misguided negative perception about the non-success/failure of the iPhone 5c of course just parallels the similar false narrative over the past couple years about Apple as a whole being in trouble. This has only recently subsided after the remarkable but well deserved dual successes of the iPhone 6 and 6 Plus and Apple’s attendant massive quarterly results, but there’s no doubt that pundits are just aching to trot it out again as soon as they can.

      3. “well below what Apple expected […] It wasn’t a total failure, just didn’t sell at Apple’s expectation.”

        Neither you, nor I, nor anyone else outside of Apple have any authority to speak to what *Apple’s* expectations were about the iPhone 5c.

        The only time I can recall Apple actually publicly revealing sales expectations for iPhones was in 2007, when they stated that they hoped to sell 10 million iPhones by the end of 2008 (and which they blew well past, at close to 4 million in 2007 and 13.7 million reported in 2008 alone).

        I suggest that you choose your words more carefully in the future, perhaps by replacing the word “Apple” with “speculation about Apple” or simply “pundits.”

      4. This is simply not true. Our research any many primary research we looked at also suggest that the iPhone 5c sold really well.

        In fact it was more of success than we first projected: It drove would be iPhone 4s users ***up market*** to the more expensive iPhone 5c.

        Most important decision factor for iPhone 5c was **NOT** the lower price. It’s COLOR

  1. The implied assumption underlying Google Android is that users need it to access Google’s wonderful services. Taking 2013 data, Google derives about 45% of its revenue from the US and another 9% from the UK; both are iPhone strongholds and users are happy to use iOS to access Google services. However, Google hardly derives any revenue from China, India and many other markets, where Android is very strong; that is, Google Android is not a very good salesperson for Google services.
    That is a real problem for Google, because why spend money, resources and scarce management attention on the development of a product that is strong in all the wrong places and does not seem to drive revenue. The business case for Android is weak within Google, which may explain the waning interest.
    An eager and hungry company that can offer a cheap Android-based OS and related software support (akin to what ARM does for processors), might find some keen customers in the mobile phone industry.

    1. “The implied assumption underlying Google Android is that users need it to access Google’s wonderful services. “. No. The current assumption is that Google needs Android to not be locked out of, or ransomed for, access to the smartphone userbase.

      1. That is certainly where Google started when they thought that Microsoft might lock them out. Many things have changed since: (1) Apple obtained a near lock on the most prized customers, (2) China locked them out, (3) AOSP has become the OS of choice in the developing world (4) Facebook is monetising mobile much better than Google, etc. So again, Android is not driving revenue in the way one would hope for, but maybe the problem is that owning a mobile OS is just not a good way for driving traffic towards Google’s desktop centric earnings model.

        1. “Android is not a very good salesperson for Google services.”

          This is not really true. Somewhat true. But not the true problem at hand.

          In reality it comes down the simple reality that the low-end users are simply unattractive to anybody. Period. They’re not at all attractive to the advertisers that Google cater to/buy ads from Google.

          They’re also a tough sell for Facebook – although they do a better job than Google. But that’s not saying much.

          If you’re a marketer why would you target the bottom barrel of the market/bottom-feeders?

  2. I don’t think it’s right to measure android in terms of profitability, because first it is a strategic offering, offering Google a lot of control and protection from competitors , and secondly the data from android(and android services) could be leveraged for many interesting large scale businesses. For example, The usage of maps for self-driving cars, the usage of android data for possible insurance products, The possibilities android offer Google if/when they decide to compete with UBER, etc.

    To a certain extent , i think those benefits are driven from the Google Apps , which must all be bundled toghether(and come in cyanogenmod or in xiaomi phones targeted to the west), so there’s maybe there’s no great fragmentation from Google’s point of view?

    1. But there aren’t many (any?) AOSP phones targeted to the developed nations (outside of Amazon which has a full replacement ecosystem). Xiaomi would be sued out of existence if they tried to sell their iClones outside China and I doubt any of their or Cyanogen’s phones would make it on Google’s approved list due to the terms of the Google Play licensing agreement.
      Google has drawn a fairly firm line in the sand about their Services. Cross the line and there is no coming back. Nor do most of the OEMs care. They don’t benefit from Google Apps anyway. The schism is pretty well defined, growing fast and Google is not getting that market segment back.

      1. I’m not sure the market they’re giving up is something they can even want/benefit from. There’s near zero (closer to zero) monetization possibility with that group of users. Let alone the current crop of entry-level android users. With ASP’s falling like a rock, the users willingness to spend declines in parallel. As are their value to marketers.

        Monetization rate from current crop of users isn’t exactly mediocre right now. And its getting worse.

    2. Rob, you raise several interesting points.

      “Strategic offering”; in retail we would call this a loss leader or prevent a competitor from establishing itself in a particular area. Loss leaders are invariably transitory in the retail setting and they are also intended to influence purchase behaviour towards a more expense and profitable its, I don’t see android as doing that in any way I can recognize.

      You raise the possibility of future valued product/service offerings: maps for self driving cars, insurance, etc. these are markets that show no evidence of being well established in any near future that I can see evidence of right now. Also the wrinkle for me is that with Apple at least most of their most “stretch the environment” offerings are predicated on their customers being on their latest iOS offering. The fact they can get such large proportions of their customer base on the latest iOS version has been critical to their success in making new offerings successful. If Google can’t get the bulk of its Android customers on latest (even later) system offerings how can Google make innovative offerings successfully established?

      I am okay with Google fans saying what they say that fragmentation is not a big issue. But if wide scale adoption of innovative features requires latest operating system features then what we see going on regarding multiple versions of Android being a continuing fact of life has to be somewhat worry some.

      1. first , regarding fragmentation. The addition of Google play services , which is udpatable in any os,over the air, enables google to easily add new software services to old phones, so to a large extent you cannot measure fragmentation by OS version installed.

        As for no evidence for those new businesses – yes there’s no evidence and they are long term, and definetly not certain. But it’s still a very reasonable assumption that having monopoly on the right data is a huge competitive benefit over the long term(and there’s nothing wrong with thinking long term).

        And BTW i’m sure Google is already monetizing said data in their search products to some level , and it helps protect them from competitors, and it seems it could be of large value already, but it’s very hard to give reasonable estimates – because we don’t have access to the data about that.

        1. There’s very little money to be made off most of the entry-level android users. They’re the users **least** attractive to marketers or any kind of business. There’s very little brand loyalty and the sole thing that matters is price.

          Regarding the next billion of smartphone users. Monetization is going to be even worse.

  3. Seems to me that Google/Android is not about market share, but mind share. Kleenex is a tissue. Google is a search, but what do you think?
    I’ll google it.. I’ll grab a Kleenex.
    If Google were to drop android they would be out of the conversation. Sort of like all of the things Google has dropped… RSS reader… etc.
    I think that the new kid on the block Mobile OS wise will be Chrome. The OS is the browser, the browser is the OS. Or something like that.
    There is no cream left once Apple skims it.

  4. From what I could get,

    – in Q3 2014 283m Android smartphones were shipped wwide ( )

    – in China, 110m smartphones shipped, of which 66% Android = 70m ( , )

    China alone should result in 25%, not 20%, of Android’s sales being AOSP : 70/283= 25%, and there’s no GMS in China.

    Either my figures are wrong, my calculations are wrong, or the way AOSP vs GMS is tabulated is nonsensical. AOSP should be even higher than the current doomsayers are punditing.

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  8. @Iqbal ZutshiI will tell you of one bizarre thing you fall for. Everything that Sam (Samuel Hahnemann) railed against in his life is right in front of you, except it isn’t what you think it is.Everything that Sam called “Allopathy” is what is now called Unani. Yes, it is the same Unani in AYUSH. Unani is Greek/Gallenic medicine. Sam considered himself to be a scientific guy. He completely believed in doing whatever had the best evidence. Unfortunately for him, because statistics had not been well-developed in his era, everything he believed that the data was showing turned out to be false. We can excuse him for that, but not contemporary homeopaths.Later, after a century, scientific medicine emerged. That killed the so-called “Allopathy” in the West. But the middle-east, which is slow in catching up to things, continued to hold onto it, and we along with them.Even today, Unani is everything you think of with revulsion when you say “Allopathy”. It follows the principles of dissimilars; modern science on the hand has no real interest in such symptom-centric theories. In Unani, they still do blood-letting and other pernicious practices from the days of ignorance.Yet, in the twisted-logic echo chambers of Homeopathy, Unani is not Allopathy, but modern medicine is – zero sense. Unani is “holistic”. No one pauses and thinks for a second, but mindlessly repeats the propaganda they have bought into. The emergence of this propaganda is an interesting story of its own and is in part due to the culture wars between Germany vs. UK/France from the last century.Don’t tire yourself by being a Google warrior in looking up silly papers that say that Homeo is “nano-medicine”. You don’t have minimum competencies in reading Biology literature. You are reading them like industrial studies – huge difference. Because biological systems are vastly multi-factorial and human subject research is further very constrained for ethical reasons, it is easy to do poor studies. So emphasis on replicability is paramount and very large sample studies are often necessary. Every new study claim is taken with a grain of salt until we get replicability, far more so than in Physics and Chemistry. It is statistically impossible to detect an uncommon side effect in early trials (that is generally for surveillance data). You don’t understand these math (not medical) issues.Homeo studies are like balloons – ALL of them. They pop the minute even a tiny needle of critical scrutiny is applied. ZERO homeo studies have produced verifiable results. ZERO. For people who have not been in the echo chambers of homeopathy, this is straight-forward. Why should a gram of nothing-but-sugar do anything? But for those propagandized, they keep looking for unicorns. They keep claiming that homeo is whatever is the cool technology that year. But the results melt as soon as other people try it out.

    Have you considered that this understanding stems from your myopic view of known science?

    At least, you have accepted that I everything I am speaking in inline with science today. That is a start. You have also admitted by extension that your claims have no basis in the science today (that includes evidence) but that you hope some unicorn science tomorrow will validate you.

    These are for illnesses that have no cure: as per allopaths

    I am not sure why you are surprised. Doctors make mistakes at different rates, just like every other human being. Better trained doctors make mistakes less often. Doctors in advanced facilities make fewer mistakes. but they all do. Laboratories do bad tests. Good studies take these things into account. I would not quickly trust a lab test in a make-shift lab in a poor village, but would place much more confidence when it comes from a standardized lab in an advanced research center. This is in part why health care costs fluctuate a lot across the world.If a doctor diagnoses something bleak and the patient goes and prays and later is well, that does not mean that prayer magically fixed him or that the target deity is now proven. That means that the doctor made a mistake. In medicine, there are second opinions for a reason.You are setting up a strawman – you are setting up the diagnosis of some arbitrary doctor as a gold standard when convenient for the narrative of your testimonial cases. You are not thinking with sound logic.

    We all go over board at times for things that are close to us.

    Sure. You certainly have gone over board with your very selective reading of medical literature since homeo is so emotional for you.But when I said: “BM Hegde reads New Age trash literature from West”, I am not going overboard. He cites known trash writers in his writing. When he says insane things like “you can change water structure by just looking at it or thinking at it”, these are not his own insane ideas. He is borrowing from some very well-known nut-cases who pretend to be doing science. You are naive about a lot of things.

    You don’t have to stoop so low as to use a magician reference for medicine

    You seemed to have just looked him up. He is a “magician” who won The MacArthur Genius Award. I thought you were impressed by award winners, as with Hegde. Randi’s award is a lot better known than Hegde’s.This is a rationalist web site. James Randi is considered an international icon of promoting rationalism and scientific thought, much like Basava Premanand in India. Citing him is not “stooping so low”. This web site has several articles and even an exclusive interview with James Randi. It would do you well to watch his shows about debunking a wide-range of pseudosciences – Homeo is just one of them. One of the homeo talks I linked was at CalTech.

    She is part of a shill group

    Sure. In Iqbal land:Anyone who explains homeopathy is a “shill”. (I have no idea which statement she made in her talk that is untruthful according to you. They are all basic uncontroversial facts about homeopathy).Anyone who does research on homeopathy and shows that it does not work is a shill.UK is stupid for agreeing that homeo is a farce.No doubt, you will say the same about Australia (The rest of Europe will soon be following suit, and later US).Doctors are murderers.NHS is killing people.Anything else? And you say, I go overboard.You can criticize the business practices and ethical practices of any pharmaceutical companies or any large corporation for that matter. But at the end of the day, any pharma companies which have helped develop the Ebola vaccine have my respect, whatever the other failings maybe.

    This he knows from seeing things close up. And who knows, if some of these hypothesis become theories in future.

    He has not seen anything from close up compared to the 99.9 (rhetorical) of the other doctors who disagree with him. You are just desperately engaging in selective reading like most homeopathy fans.Tell you what:If homeo nonsense is ever proven (in a manner that convinces the global scientific community), I will come here and apologize.If the scientific community (not some new-age nut-cases pretending to do science) agrees that you can restructure water by thinking about it, I will post an apology for Hegde here. OK?

    The 10 avatars of Vishnu have uncanny resemblance to Darwin’s theory of evolution sequence.

    You are reaching for the bottom of the barrel now.

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