CyanogenMod, which develops and distributes popular Android mods for hundreds of smartphones and tablets, has morphed from an open source project into a fully-funded startup. Following a $7 million funding round, CyanogenMod Inc. is readying a much-improved installer and plans to add security and user-customization features, and it hinted it may get into services and even mobile hardware.

Steve Kondik, who founded CyanogenMod in 2009, announced that the formation of CyanogenMod Inc. actually occurred back in April, following $7 million in Series A funding from Benchmark Capital and Redpoint Ventures. Since then, the pace of development has “picked up drastically over the past few months,” writes Kondik. “More devices supported, bigger projects such as CM Account, Privacy Guard, Voice+, a new version of Superuser, and secure messaging. We vastly improved our infrastructure. We’re doing more bug fixes, creating more features, and improving our communication.”

Kondik related how Google’s cease-and-desist letter against the open source project in late 2009 made CyanogenMod into something of a cause célèbre in the open source community, generating much-needed publicity. After removing the proprietary Google apps from their stock Android builds, the project made peace with Google, which provides the code foundation for CyanogenMod (CM) via its Android Open Source Project (AOSP). In the process, it also discovered a growing legion of users beyond the core hacker/modder community.

CM on Kindle Fire 1 (click to enlarge)

The problem of bloatware and unwanted UI skins had already gotten so bad, a surprisingly large number of users — about 8 million so far — have been willing to struggle through the difficult CM installation process and often risk their smartphone and tablet warranties to achieve device freedom. The skins tend to be better now, but still tend to clutter the interface and slow down performance. CyanogenMod continues to stay popular by churning out numerous builds for different device models, and by making performance enhancements and adding the types of firmware that users actually want.

Other third-party Android builds use CM code, including Xiaomi’s MIUI. The project has inspired that Chinese company’s approach of using user feedback as the driving force of development.

Now that CyanogenMod is funded and incorporated, improving installation is one of the company’s top goals, along with building new security features and other components, says Kondik. The fragmentation of the Android device world has proved extremely challenging in improving installation, but the company plans to release an installer on Google Play “in the coming weeks” that will greatly streamline the process, adds Kondik.
 

Will CM take on hardware?

Now that CyanogenMod is a company, the pressure will be on to make money. The company now comprises 16 staffers split between Palo Alto and Seattle, but is supported by a much larger hacker community. Kondik was unclear on the future except to hint they would stay true to open source principles. In the past, CyanogenMod has funded itself in part by selling aggregate diagnostic data from users’ devices, but that may not be enough now that Kondik and his band of modders have given up their day jobs. (Kondik had been working at Samsung.)

The most likely scenario is that CyanogenMod will continue to offer core builds as free open source, but will then begin to sell support services and license specific add-on software. Yet, a Reddit AMA discussion yesterday with Kondik and CyanogenMod co-lead developer Koushik Dutta, opened up another intriguing possibility: selling unlocked hardware.

Dutta noted that “monetization isn’t an immediate concern,” but that “eventually, there are innumerable paths to monetization once we reach economics of scale: licensing our software/services to OEMs, building hardware, creating secure enterprise solutions, etc. Creating disruption in a multibilion dollar market is enough to make any investor raise their eyebrow.”

When this generated more questions in the Reddit discussion, Dutta seemed to back off a bit, however. “Right now we only have the capacity for partnerships with well established OEMs,” he replied to one question. “We certainly couldn’t take on the monumental task of building/testing hardware. Hardware would be one of many potential very long term paths we could take.”

It’s a good bet that the next big mobile operating system will be open source, and while we’re intrigued by the offerings of the Linux-based Firefox OS, Tizen, Jolla Sailfish, and Ubuntu Touch, it may well instead be an Android-based OS that rises to the fore. After all, Android compatibility is becoming a key factor in differentiating the various mobile Linux projects.

It remains to be seen whether CyanogenMod becomes, as one commenter to the announcement said, “the Red Hat of the handheld computer world.” If nothing else, maybe we’ll finally see a decent CyanogenMod installer.