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Dell may pass on notebook losses to Sony news
Our Corporate Bureau
16 August 2006

Mumbai: Direct seller Dell, which is feeling the heat of combustible lithium-iron batteries in its laptop computers, may pass the cost of its recalls to Sony Corporation, which had supplied the batteries. Dell's recall of over four million notebook computers could cost Sony up to $430 million, say analysts.

Dell expects no financial loss from the recall, as Sony will have to bear the burden of replacing the combustible batteries. Dell may take a hit on its reputation but consumers will get a free replacement battery and that will cost Sony.

While Dell has received six reports of batteries overheating, and causing damage, Sony batteries are under investigation elsewhere as well. The US Consumer Product Safety Commission is looking at other laptop brands that use Sony batteries to see if they too pose a risk of fire.

Other major manufacturers like Apple, HP and Lenovo use Sony batteries. If all these manufacturers were to follow the Dell recall, possibly one of the biggest for any computer manufacturer, the electronics industry, and more particularly the laptop business, would be in chaos.

Sony, however, said the overheating problem is specific to batteries supplied to Dell. It is more of a technical problem with the Dell machine and not pertaining to the battery as such, said a Sony spokesman. The recall decisions are up to individual manufacturer, he added. Sony said the problem was in the way Dell laptops charge the battery.

HP, the second biggest computer maker, said, "It is a Dell issue." Apple would not comment while Lenovo said it had no plans for a battery recall yet.

However, analysts said, Sony's battery-supply business is small compared with its overall operations and a complete loss of the battery business may not cost Sony much. But the recall comes at a time when Sony is facing fierce competition from rivals Samsung Electronics and Sharp Corp as it tries to revamp its electronics business with its Bravia-brand LCD TVs and Cybershot digital cameras.

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Dell may pass on notebook losses to Sony