Who could want a piece of Motorola Mobility?

Motorola Mobility (MMI) recently announced its first earnings results as a new and independent business entity. Although previous talk of a sale to a rival vendor has died down, it's interesting to revisit this idea in light of its new found independence.

First and foremost we should evaluate MMI's assets and who can benefit from it. Over the past few years, the company went from being a global player present in all consumer segments to a local vendor focused on a very particular niche segment (albeit one that still gives it a market cap of around US$8.5 billion). Following a disastrous free fall across all regions, MMI is now mainly focusing on its domestic market as well as China, making mid- to high-end Android smartphones. It is unlikely to trade lightly the very close ties it has built with top operators and retailers in both markets but, arguably, the value of its devices assets is not huge. Android is a software platform widely available to any manufacturer, and ODMs long ago mastered the minimalist design of wide, black touchscreens. Hence, any competing manufacturers looking to acquire Motorola Mobility will probably be mainly interested in benefiting from its presence in the US and Chinese markets rather than its current handset capabilities.

Under this scenario, Nokia would be a good match. The Finnish manufacturer has been struggling to infiltrate the US market, a scenario CEO Stephen Elop characterises as a "pattern of disappointments." In Q4 2010, Nokia reported a 9 percent yearly drop in device and service net sales in North America and recently also made the headlines by cancelling the exclusive launch of a flagship smartphone, the X7, with AT&T. In contrast, Motorola shipped some 7 million handsets in North America in Q4 2010 and announced the launch of new Android-based devices (including a tablet) all tied to Verizon Wireless, AT&T or T-Mobile USA. A merger between both firms would help Nokia increase its presence in the US and rapidly improve its smartphone portfolio. Brand strategy, however, will be difficult to assess since Motorola is surely benefiting from a better brand awareness in the US than Nokia, but the opposite is true in regions such as Europe and India where Nokia is strongest. Would a 'Nokiarola' or a 'Motokia' brand make any sense? Probably not.

However, rather than an M&A deal with a directly competing manufacturer, I anticipate more interesting scenarios from convergent players such as Dell or Lenovo. Dell is king in the US while Lenovo is emperor in China – and both are aggressively competing against each other in both markets. Could a partnership with Motorola Mobility help them to differentiate and improve their portfolio of enterprise devices and services? Most likely.

A Dell-Motorola partnership would be a perfect match. Dell has a lot of ambition to grow its enterprise business, which CFO Brian Gladden describes as "a strategic imperative." Gladden also stated last year that Dell will have "solutions and capabilities and hardware, whether that's a 10-inch Windows-based device that starts to feel and look a lot like a notebook, or whether it's an Android device that fits into a virtualized desktop sort of environment." Gladden also added that Dell is an "80 percent enterprise-focused company, where the enterprise still needs the kind of devices that we can create, including tablets and smartphones." Motorola's portfolio of devices is certainly well positioned to deliver on those objectives and – as a well respected brand in the US - it would boost Dell's credibility in making and selling quality handsets and tablets.

In addition, Dell would benefit from Motorola's ties with mobile operators, especially to compete with Lenovo in China. Similarly, a Lenovo-Motorola merger would help the Chinese vendor to boost its presence in North America and compete against Dell. But my money is on a merger between the two US firms. Indeed, Dell's Gladden acknowledges that "carriers will continue to be a channel as you look at 3G-, 4G-enabled devices [...] those are opportunities to partner and bring some of our channel strength and relationships with our customers into that offering [...]. As we move forward, as we build those capabilities, we'll be able to do that with various different partners."

Dellorola, anyone?