Sony will help pay for Dell battery recall

It's not clear how much the massive recall will cost

Sony Corp. has promised to share the cost of a massive battery recall announced by Dell Inc. late yesterday after a series of laptop PCs burst into flames (see "Dell to recall batteries, cites fire hazard").

Dell reported to the U.S. Consumer Product Safety Commission that 4.1 million laptops worldwide could catch fire and recalled the batteries, which were built by Sony.

Asked if Sony would help pay for the cost of the action, a spokesman said, "We are supporting Dell in many factors of this recall, and that is one of them."

The financial effect on both companies is unclear. Sony would not say how much money was involved, but the company did say it had also provided the battery cells to other PC manufacturers.

The defect was caused by a short circuit that happens when microscopic metal particles break through the lithium ion cell wall and contact a battery anode, said Sony spokesman Rick Clancy.

"You try to eliminate that in the manufacturing process, but to eliminate them 100% is very difficult. Usually, when you have a short circuit, it might lead to a battery powering down so you'd have a dead battery, but other times, it could lead to incidents, including flaming," Clancy said

The chances of a short circuit depend on the design of each PC, such as whether the battery cells are aligned in parallel or are perpendicular, and their proximity to heat sources such as the processor and power supply. But ultimately, the odds are against the engineers.

Despite the challenge of blocking every particle, the number of short circuits has been very low, Sony insists.

"It's a number you can count on two hands," Clancy said, adding that it is inconsequential "when you look at it by Six Sigma standards." Six Sigma is a measure of engineering quality that ensures a process will not produce more than 3.4 defects per million opportunities.

Faced with the danger of fighting open flames in an office or airplane, many corporate IT managers might not take solace in Sony's assurance. But some analysts agreed that the chances of a given laptop catching fire are slim.

"Bully for Dell to come clean and admit it. The incident rate is very, very low. It's a handful, and they've got 4 million batteries, so it's not like the Pinto," said Ted Schadler, vice president for consumer electronics research at Forrester Research Inc. The Pinto was a car sold by Ford Motor Co. with a design defect causing its fuel tank to rupture in rear-end collisions, leading to deadly fires. Ford recalled 1.5 million Pintos in 1978.

Many IT managers now face a choice of whether to embark on an expensive campaign to recall all the laptops scattered throughout a large company.

"IT departments may not pull out all the stops; it depends on their replacement cycle," Schadler said. "If it's an executive cycle of one or two years, they might wait, but if it's three years, they may want to do it sooner."

Many IT managers will ask Dell for more details, since the recall spans a variety of 10 types of Dell Latitude notebooks, 15 models of Inspiron notebooks, four Precision workstations and four XPS models.

The engineering specs, models and applications used will vary so much among those PCs that some administrators may decide that certain computers have an acceptable amount of risk. After all, Dell was merely following market demand to install power-hungry processors, shave weight off portable PCs and hold prices down, Schadler said.

"Dell is not known for their engineering prowess, are they? Sony is an engineering company, and Dell is a marketing and sales company."

But another analyst said the recall could cause havoc in corporate IT departments.

"IT managers need to react quickly to Dell's recall. It is likely to cause headaches for travelers that are asked to rely on AC power while waiting for the battery to ship to them. End users will not be happy," said Samir Bhavnani, director of research at Current Analysis Inc.

Losing customers' trust would be bad news for Round Rock, Texas-based Dell. The company missed its earnings target for the first quarter and has watched rival Hewlett-Packard Co. catch up fast in market share.

"Dell right now is at a low," Bhavnani said. "It is likely that we will not see a huge impact from the changes Dell is making until the second half of 2007."

Since reporting its last results, Dell has spent $100 million on customer service and has simplified its process of offering discounts. Investors could learn more about the company's reaction to the recall when Dell reports its next quarterly earnings on Thursday.

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Copyright © 2006 IDG Communications, Inc.

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