It began almost as a joke but blossomed into the largest consumer electronics recall yet. In August this year nearly six million notebook batteries were deemed dangerous and recalled by Dell and Apple because of concerns some faulty batteries could cause the notebooks to catch fire.
The kafuffle started in June when a reader sent to UK publication The Inquirer sent it pictures of a Dell laptop spontaneously and spectacularly bursting into flames at a Japanese conference (we all saw them). Links to the story and images shortly appeared on newsgroups and websites, and rapidly gained notoriety.
Following these publications several other Internet users posted their similar stories of combusing notebooks online. Six such incidents were confirmed, and the finger pointed at the Sony-manufactured lithium-ion batteries inside the Dell notebooks. Sony later detailed the problem: tiny metal particles in the batteries could cause an internal short circuit and lead to the battery cell overheating. This could only happen in rare conditions, however.
Dell recalled in total 4.1 million notebook with the Sony batteries it says could have been at risk—this represented a little less than 20 percent of all notebooks sold by the manufacturer between the recall period of July 2004 and July this year.
Ten days later Dell had company. Apple Computer, which has also used the Sony battery in a third of its PowerBooks and iBooks made in the last three years, issued a battery recall for select models. It says roughly 1.8 million Apple notebooks worldwide were using the faulty battery, and it knew of nine incidents of notebooks catching fire—two of which caused minor injuries to users and seven of which caused minor property damage.
Sony-made batteries are also found in other brands of notebook, such as HP, Acer, Lenovo and, of course, Sony’s own line of Vaio notebooks. Sony claims that the problem only happens as a result of the battery working with particular implementations such as Apple and Dell’s fast recharging technology.
These claims have been backed up by the notebook other vendors using Sony batteries—HP, Acer and Lenovo are all saying that their notebooks are safe and, to date, there have been no confirmed reports of such incidents from these vendors’ products.
Nonetheless, Sony has admitted the Apple and Dell battery recalls will have significant financial effects for the company. It says the recall will cost the company between $225 and $338 million. There were initial fears of a stock-price slide as well, and Sony stock did fall about five percent in the two weeks subsequent to the inital Dell recall (which incorporated Apple’s recall as well).
But with this in mind, share prices in Sony’s competitor Sanyo remained the same.
The good news for Sony is that despite the damning of reputations for all involved, Sony has not lost its contracts with Apple and Dell; both have said they will continue to use Sony as a battery supplier. Sony has already changed its battery manufacturing process for Dell in early 2006, and batteries manufactured by Sony from February this year on are also believed to be safe.
And now, months down the track from the first flame, things seemed to be heading back on track for Sony. Its main challenge is to meet demand for battery replacements in a reasonable time frame (Apple has told customers they may have a wait of up to six weeks for a replacement). If it can do this, Sony is likely to escape from this incident mostly unscathed apart from a bump to its reputation and a few hundred million dollars down the drain.
—Nathan Taylor
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