Cyanogen made the right move turning down Google's alleged acquisition

cyanogen rebrand

For some, CyanogenMod is just another Android fork in the road. But for Cyanogen, its open-source operating system is the foundation of a burgeoning empire, and there are no plans to sell it off anytime soon.

A report published by The Information Thursday claims that Cyanogen recently turned down a $1 billion acquisition offer from Google. The startup apparently told its shareholders that it “declined to pursue the matter” because its barely had the chance to take off, and now it’s “seeking a valuation close to $1 billion.”

Experts told me that waving off Google’s advances are in the company’s best interests—even with a super-fat paycheck sitting on the table. Of course, it helps that Cyanogen has already established partnerships with hardware companies like OnePlus and Oppo. The Information also reported that Micromax is Cyanogen’s next hardware partner, which just recently launched its first Android One device.

oneplusone 9226 Florence Ion

Cyanogen tried its own efforts at marketing a flagship with the OnePlus One.

For its part, Cyanogen is mostly staying mum on the topic. Abhisek Devkota, Cyanogen’s head of developer and public relations, told me that the company’s “priorities haven’t changed—we are working to build the best OS possible for our users.” He then added that, respectfully, that Cyanogen isn’t commenting on the latest rumors. 

Regardless of the validity of the report, analysts agree that turning down an acquisition puts Cyanogen on the right path. Carolina Milanesi, Chief of Research at Kantar Worldpanel, notes that The Information says Cyanogen turned down the deal to keep Android open, but believes there’s more to the story—specifically, that Cyanogen has other potential buyers lined up.

“They seem to have secured Micromax to manufacture devices for them, and with more whitebox vendors like Micromax getting better and bigger, they might have a shot in the short term to grow their presence and market value,” Milanesi told me in an email.

Cyanogen could have also turned down Google's offer to better realize its opportunity in emerging markets, like China. Will Stofega, the Program Director for Mobile Device Technology and Trends at IDC, believes that Google pursued Cyanogen because of its presence there. “Google’s not making much there,” he said. “Most people are using [AOSP], and Google isn’t getting the ability to track their information.” Stofega went on to say that roughly 50 to 70 percent of Android users in China aren’t actually using licensed versions of the operating system. “In other words, you’re not running any Google applications,” he said.

Stofega also expressed optimism about Cyanogen’s future. ”People have argued that Google is trying to shut it down,” he said. “I would argue that if you’re a company that’s looking to get out from under the Android footprint, if you can get a search engine, a navigation program, and a couple of other things, you’re in a pretty good space.”

This is basically what Nokia did, taking Google’s AOSP and forking it into its own operating system to sell in emerging markets. “Where Nokia went wrong, they didn’t quite have that app store part of it figure out,” said Stofega. “If [Cyanogen] plays it right, there’s definitely a place for a company that is able to go to market and offer a different type of Android experience.”

Fortunately for Cyanogen, it has a healthy relationship with Google—or at least it did. The OnePlus One, which is technically Cyanogen’s first flagship smartphone, is equipped with the Google apps suite that comes standard with all Google-blessed Android devices. But we may soon see a change in the relationship between the two companies.

Whether Google attempted to woo Cyanogen with an acquisition is still just hearsay at this point in time, as neither Cyanogen nor Google will comment on the matter. “Jessica Lessin [of The Information] has a good track record,” said Daniel Matte, an analyst at Canalys.  “But I think there needs to be some natural skepticism about this rumor.”

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