Anyone interested in Android should pay attention to the recent investment Microsoft made in Cyanogen as identified in this article on Newsfactor. Cyanogen is identified in the article as a company that “…has promised to take the open-source mobile operating system away from Google.” This suggests an epic struggle may evolve over the evolution of that open source code, especially as it relates to enabling related services such as social networking, email, maps, and other critical value-added services.
The structure of Android is described in depth in the recent Mercator Advisory Group research note The Obstacles Facing Android to Enable a Payments Infrastructure That Rivals Apple Pay, and to say that the Android value chain is complex is a huge understatement. For example, there are roughly 40 different potential combinations of Apple iPhone and Apple iOS combinations, but there are more than 95,000 possible combinations of Android, and I may have missed a multiplier in there somewhere!
So the question until the announcement of Microsoft’s investment in Cyanogen seemed straightforward: “How will Google align the value chain to simplify the many permutations of Android to enable a more standardized payment platform?” That task appeared difficult when originally asked, but this announcement suggests it will get harder—much harder!
The key issue here is that many Android device manufacturers utilize only the open source version of Android to avoid having to pay the Google licensing fee associated with the Google services that add significant value to the Android experience. Many of these services are identified in Mercator Advisory Group’s research report titled M-POS: Expanding the Payments Value Chain into New Territories, released in January.
Now consider the possibility that Cyanogen creates an open sourced version of Android that enables Microsoft services, or any other service, to be plugged in. This would enable service providers competitive to Google to fight for the attention of device manufacturers or might even enable device owners to decide for themselves which service provider they want integrated to their smartphone.
Microsoft can affect the direction of Android in at least two possible ways: The first approach would be to have Cyanogen create an open source Android derivative that has services from Microsoft tightly baked into the environment, in effect establishing a Microsoft version of Android. The second approach would be to have Cyanogen implement open application programming interfaces that enable competition among service multiple service providers (in essence the same approach that Microsoft took with Outlook eons ago).
This Is An Excerpt from Tim Sloane’s Mercator Advisory Group’s member only blog. See full list of all Mercator Advisory Group blogs.
