The Wall Street Journal scooped the tech media this afternoon with this report that Microsoft has invested in “rogue Android startup” Cyanogen. Microsoft is a minority investor in a round of equity that will see Cyanogen raise roughly $70 million, according to unnamed sources cited by the Journal; the round would reportedly value Cyanogen in the “high hundreds of millions.”
Cyanogen was established as a commercial enterprise in 2013, and in recent weeks the company has attracted attention with bold claims such as aiming to “take Android away from Google” by building its own independent ecosystem atop Google’s operating system. That isn’t exactly a unique goal, of course – Samsung and Xiaomi, among others, have had similar visions – but only Amazon has had any notable success with the strategy in the Western Hemisphere, and Amazon hasn’t been able to extend that success beyond tablets to smartphones in any real way.
Microsoft has long been rumored to be considering forking Android as well, and rumors surfaced last fall that Microsoft may be pursuing a partnership with Cyanogen. That’s certainly understandable considering Microsoft’s ongoing struggle to pose a threat to Android or iOS. I expect Microsoft to continue to invest heavily to increase Windows’ share of the mobile market, and I still expect that share to grow over the next few years. But Cyanogen could eventually carve out a respectable piece of the market with its forked version of Android. And that could give Microsoft an additional chance to access a mobile market that has proven so difficult for it to reach.
Reuters reported earlier this week that Samsung had recently offered as much as $7.5 billion to buy BlackBerry in a scoop that sent shares of the Canadian company soaring (only to crash after both companies denied any talks). But the story also had pundits speculating about why Samsung might be so interested in BlackBerry in the first place: Longtime analyst Jan Dawson rightly noted that any deal certainly couldn’t be driven by devices; Joshua Topolsky opined that Samsung is likely focused on BlackBerry’s expertise in mobile security; and Heather Clancy at Fortune speculated the Korean company has its eyes on BlackBerry’s intellectual property portfolio. But the real prize in any acquisition may be QNX.
The engine that powers the BlackBerry 10 OS, QNX is also making big strides in the connected car market, as I recently wrote about over at Gigaom Research. The platform is already used by BMW, Chrysler, Land Rover and Porsche, and last month Ford announced that it was dumping Microsoft’s Embedded Automotive OS in favor of QNX. So BlackBerry’s platform is well positioned to build on the 53 percent of the connected car market that IHS estimated it claimed in 2013. That’s an impressive lead in a market teeming with potential and still in its early days.
The problem, however, is that QNX generates only about $3 for BlackBerry for every car sold, according to IHS estimates. So the question is whether QNX can capitalize on its lead in the connected car market and gain traction in other segments of the Internet of Things. QNX enjoys substantial support from third-party developers, and its reputation as a highly secure and reliable platform could be a big advantage in markets such as mobile healthcare and the smart home.
BlackBerry may have to offer heavily customized products and services running QNX to fully exploit those other markets, however. And that will prove difficult and costly for a company that’s trying to regain its footing following a devastating beating in the smartphone market. But Samsung may be better positioned to develop a line of QNX-based offerings: It has deep pockets as well as a massive worldwide footprint selling all kinds of hardware. And taking control of QNX would greatly increase Samsung’s ability to build its own ecosystem in mobile, which has long been its goal. QNX may not have tremendous value today as a revenue generator, but it would be a powerful weapon in the hands of Samsung.
Samsung is making headlines today with the long-awaited launch of its first smartphone running Tizen, its homegrown mobile operating system. The Samsung Z1 launched in India today with a price tag of roughly $92 (unsubsidized, of course), making it an attractive option in a massive market where smartphone sales are booming. The launch follows a series of missteps by Samsung in its effort to bring a Tizen-based phone to market, and it marks a shift in its original strategy to target the high end of the market with the OS.
Tizen has become increasingly important for Samsung following Google's moves to retake control of Android, effectively preventing Samsung from building its own ecosystem within the world's dominant mobile operating system. But while the smartphone market in India teems with potential, competition there is cutthroat -- especially among low-end devices. Samsung is taking on Google's impressive Android One devices as well as affordable new gadgets from Micromax and Xiaomi, which has flourished in its home market of China.
But Samsung's plans for Tizen extend far beyond smartphones, as I wrote two months ago for Gigaom Research. Samsung is using Tizen not only in its smartwatches and TVs, the OS is also used in Samsung's Simband platform for developers, which is a key component of the ambitious cloud-based health initiative dubbed SAMI. Tizen will also be integrated with Samsung's SmartThings hub "over time," according to recent reports, and it may play a role in a future virtual reality headset from the company. Gaining a substantial foothold in ultra-competitive smatphone markets will prove difficult for Samsung. Tizen is likely to gain traction more quickly in IoT segments like mobile healthcare and the smart home.
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