Break-Up Call

Cyanogen and OnePlus End Their Relationship

Cyanogen and OnePlus have ended a partnership that saw the CyanogenMod smartphone platform running on OnePlus hardware and enabled the companies to build global followings. CyanogenMod is fully compatible with Google services but established itself as an alternative flavour of Android, while the OnePlus One CyanogenMod-based smartphone gained a cult-like following with an invite-only purchasing process and highly competitive pricing.

OnePlus’ Android fork, OxygenOS, is expected to be pre-installed on the upcoming OnePlus Two, due later this year.

The relationship between the companies was strained when OnePlus One sales were banned in India after Cyanogen entered an exclusive relationship with Indian handset maker Micromax. Micromax established a sub-brand called Yu, and its first CyanogenMod-based device, Yureka, began shipping in late December 2014. Based on a number of sources, we estimate that significantly fewer than 1 million units have been sold to date in a market that we expect to reach 300 million mobile phones in 2015, and in which Android has dominance in the growing smartphone segment.

Cyanogen is enjoying some momentum after it announced a partnership with Microsoft earlier this month, through which Microsoft apps including Bing search, Microsoft Office, OneDrive and Skype will be pre-installed onto CyanogenMod. However, the partnership isn’t exclusive, and Microsoft has similar relationships with other Android smartphone makers. We see the deal as a positive step for Cyanogen, but this alone won’t break Google’s hold on the platform.

However, we expect that the deal with Microsoft will be the first of many, as Cyanogen seeks to offer the services and apps required to create a true alternative to Google-flavoured Android. In order for CyanogenMod to have any real effect on the market, Cyanogen will need to gain the support of a top-tier smartphone brand willing to adopt the platform on a flagship product. This could be a risky move given the lack of supported Google apps and services, though might present an opportunity for differentiation.

The history of fringe platforms breaking into major leagues isn’t promising: in the past decade, we’ve seen many mobile operating system start-ups supported by major operators, software companies, hardware firms and Internet service providers fail. Cyanogen’s fan base will remain, and could chip away a niche for itself, but the company will need some very large numbers to “break” Android as some are predicting.

Please see Cyanogen: Modifying the Status Quo for in-depth analysis of the company’s future plans.

If you’d like to receive free Daily Insight e-mails every day, click here to sign up