Sony's Battery Recall Fiasco

By the end of October 2006, the number of Sony-manufactured batteries to be recalled had crossed 7.7 million units. Some analysts projected that this number could increase to 10 million.¹⁰ Sony was the world's second-largest manufacturer of lithium-ion batteries and a leading supplier to many notebook manufacturers. Many felt that the company's image as a manufacturer of world-class quality products was dented by the negative publicity surrounding its battery recall. Analysts opined that Sony had been slow to respond to the problem. This was later acknowledged by the company's representatives when they apologized to customers and vendors for the inconvenience caused on account of the global recall.

The company said that the costs associated with the global battery recall and the development costs for the PlayStation 3 console¹¹ (PS3) were the reasons for the decline in profits. It was reported that Sony had estimated the total cost of the recall to cross US$ 429 million.¹² Sony's rivals like Sanyo Electric Co., Ltd. (Sanyo) and Matsushita Electric Industrial Co., Ltd. (Matsushita) were expected to derive some benefit from clients' unhappiness with Sony. It was also reported that Toshiba, Fujitsu and Hitachi, Ltd. would be claiming damages from Sony for the volume of business they lost on account of Sony's battery recall. However, analysts noted that given the nature of the industry, it would take a couple of years for a vendor to switch over completely to a new battery supplier...