On the AMA he said that they (and the VCs agree) are concentrating on growth now. It makes sense to me, if the "bigger than Windows Phone" thing is even close to being true that seems like something worthwhile.
The best thing to happen to them is the acqhire, if a big player buy them and the talent and using this android branch like the chinese Xiaomi will do..
Have more than one player using their branch is more difficult, and unlikely, but possible..
My point being: people dont change, or buy phones because of small features and details.. it must be enough distinction to make a good point, it must be the whole package..
The mobile os sea its prety red right now, full of big sharks
Many android users have two options: keep using an older version of android or root their phone and pick up a new OS to get the latest and greatest. CM is the best OS for many models and makes of phones.
I also think their current success up to this point indicates the potential in the market. Something has brought in their millions of users. I'm don't think there is a problem of how they can distinguish themselves as much as there is the question of what have they already done to distinguish themselves and will it scale?
CyanogenMod could effectively help more users get the latest version of Android faster than manufacturers and carriers would, and continually do so with their own software OTA cycles and suddenly have a platform of Android on top of the major devices regardless of manufacturer/carrier.
- privacy-conscious device location
- cross-platform secure messaging
- multimedia streaming to "anything"
- ...
Assuming they can get official access to Google services, they'll have the whole package (which is unsurprising, they couldn't have gotten to millions of users without it).