Microsoft wants to back Android-forking startup Cyanogen

What does Microsoft see in Android developer Cyanogen? It’s a question raised on Thursday by a new report in the Wall Street Journal that says that Microsoft is planning to be a minority investor — to the tune of “roughly $70 million” — in Cyanogen’s latest equity financing round.

At first glance, Microsoft investing in Cyanogen seems to be an odd choice, given that Redmond says it is committed to its new Windows 10 operating system for smartphones. CyanogenMod is based on Android but is not Google’s version of Android; Cyanogen takes the open-source version of Android and builds alternative firmware for existing phones on top of it in conjunction with a thriving community of independent software developers.

Although the startup has released a few easy one-click install tools, interested users still need to seek out the alternative operating system, which keeps the number of people using it fairly low. Cyanogen has been pre-installed on only a few devices overseas to date, most notably the OnePlus One. If CyanogenMod is to become a mainstream variant of Android Cyanogen needs to contract with phone makers to get it pre-installed on phones and tablets.

Microsoft’s investment could be defensive. The Information reported in October that Google itself had expressed interest in acquiring the company at a valuation of close to $1 billion. The mere fact that it seeks to create an alternative to the Google Play Services-dependent version of Android gives it value to both Google and Microsoft, if only as a pawn. “We’re attempting to take Android away from Google,” Cyanogen CEO Kirt McMaster said at The Information’s conference in San Francisco last week.

But cool things are happening on top of the Cyanogen platform. Buzzy startup Nextbit is deeply integrating cloud services into CyanogenMod to provide interesting features like the ability to “throw” current work from a phone to a tablet. Thanks to increased interest from programs like Google’s Android One and the increasing prevalence of smartphones in countries like India, CyanogenMod is increasingly supporting a larger number of devices, including those running on MediaTek chips.

Cyanogen previously raised $23 million in series B funding in late 2013 led by Andreessen Horowitz.