This is quite exciting news.

I've been running Cyanogenmod (CM) on my NinjaTel phone (a HTC One V) for a year now and it's been an interesting experience that has led me to think a lot more about the nature of a smartphone operating system and how the current offerings are positioned - e.g. the completely closed, manufacturer-controlled iOS versus the open (in theory but, in reality, controlled by the mobile network operators) Android.

The path by which a new version of Android currently makes its way onto the average user's phone is tortuous. First, Google release the new version of Android, then the chipmakers have to support it, then the phone manufacturers have to create a new release which must be tested by the mobile network operators (MNOs) before they will release it to their users.

The fact that Apple owns makes both the hardware and software (and refused to let the MNOs customise iOS[1]) has allowed them to streamline the process so that, when they release a new version of iOS, it has already been tested with their partner MNOs networks and can be delivered direct to their customers' devices (and note that Apple regards iPhone owners as /Apple's/ customers, not the MNOs').

I guess that, without first mover advantage and with multiple, competing hardware manufacturers, Google was unable to strike the same sort of deal that Apple did. Fortunately, Google have finally recognised that this puts Android at a disadvantage and have started shifting functionality into apps that can be upgraded via the Play store[2].)

In any case, the general public have slowly come to realise that (a) the phone and the network are not inextricably tied, and (b) the functionality of a phone (i.e. the apps it can run) is not dictated by the phone's OS.

Logically, the next step is to recognise that phone device and operating system are not inextricably linked - i.e. when you buy an Android device, you can replace the pre-installed OS with something else. However, that's quite a big step for the general public to take. The average consumer still regards consumer electronics products as a single package. It would need to become exceedingly easy and very clearly advantageous for them to consider replacing their stock OS. Just think about how many average consumers who buy laptops replace the default install of Windows with Linux.

That's not to say that it will never happen, just that it's not going to happen overnight and CM have a lot of work to do to build a viable and sustainable business around supplying their version of Android direct to retail consumers.

In the meantime, one customer segment that Cyanogenmod should definitely be looking at are large corporates, who want to be able to customise the phones they give their employees (e.g. to tie into internal mail systems, employee directories, route calls via the company's internal network, etc.). BlackBerry has been a leader in this space but uncertainty over the company's future means that some clients are potentially open to approached from an alternative supplier [3], particularly one that is not inextricably linked to a particular manufacturer or network.

They could also attract the interest of mobile virtual network operators. Personally, I think it's just a matter of time before we see an MVNO that abstracts voice calls towards a least cost routing model that takes advantage of data connectivity to make VoIP calls (instead of traditional phone calls) when it's cheaper to do so. CM would be well-positioned to provide the OS for this type of service (although, if Microsoft had any common sense, they'd already be doing this now with Skype).

In the meantime, it will be interesting to see how Google (and, indeed, the manufacturers) react to Cyanogenmod's incorporation. Specifically, I'll be interested to see whether Google strike the same sort of deal with Cyanogenmod that they have with Mozilla (i.e. search royalties)

Footnotes:

[1: Apple (specifically Jobs himself) were only able to refuse to allow the MNOs (and specifically AT&T) to customise iOS because the iPhone was such a ground-breaking product. RIM, for example, also made both the hardware and software for the Blackberry but were forced to allow the MNOs to customise the OS.]

[2: http://arstechnica.com/gadgets/2013/09/balky-carriers-and-sl... ]

[3: Morgan Stanley Reportedly Holding Off on BlackBerry 10 Upgrade: http://n4bb.com/morgan-stanley-reportedly-holding-blackberry... ]