Microsoft Reportedly Investing in Android Startup Cyanogen

A single investment by Microsoft might radically alter the landscape for Android devices forever. That's because the object of its affection, Cyanogen, has promised to take the open-source mobile operating system away from Google.

News of the potentially revolutionary development comes courtesy of The Wall Street JournalEUs Digits blog, which reported on Friday that Microsoft would participate in a $70 million equity round for the one-year-old company. The paper quoted people familiar with the matter. MicrosoftEUs participation could open the way for a version of the Android OS that is more compatible with Microsoft apps.

Not As Open As You Think

In some ways, the investment would appear to be counterproductive for Microsoft. Cyanogen develops CyanogenMod, a derivation of the Android system that contains features and options not included in the source code provided by Google. Phones running CyanogenMod would compete with handsets running MicrosoftEUs own Windows Phone operating system.

But the reality is that Windows Phone devices make up only about 3 percent of the smartphone market, a drop in the bucket when compared to Android, which commands 84 percent of the market. If Microsoft is serious about improving the position of its apps in the mobile market, Android is the main platform it will have to deal.

That seems to explain the strategy behind the reported investment. For all of GoogleEUs talk that Android is a fundamentally open source project, access to the platform has come with strings attached. In fact, Google has required that handset manufacturers feature its own apps in exchange for access to its ubiquitous search service. Google has also insisted that its search tool be set as the default.

Those limitations have irritated device makers while putting Microsoft at a competitive disadvantage when it comes to getting its own mobile apps into usersEU hands, or...

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