After the dust began to settle from last week's announced recall of more than 4 million Sony lithium-ion batteries found to pose a possible fire hazard in Dell brand laptops, market analysts began assessing if the distraction (and cost) of such a massive recall would distract Sony from its short-term and longtime plans.
As the Wall Street Journal and Washington Post, among others, report this week, although Sony stock seems to be holding its own, the timing of the incident is particularly unfortunate for the Japanese firm and its American CEO, Howard Stringer.
The battery recall, the biggest in computer history, comes barely a month after Sony announced a return to profitability in Q2 2006. It also comes a few months before the crucial holiday selling season when Sony's long-anticipated PlayStation 3 (with built-in Blu-ray drive) will reach market. The holiday season is also when Sony and its competitors sell the most HD monitors and other CE equipment in a very concentrated time frame. The recall also comes as Sony is competing with Toshiba and others in the battle of Blu-ray vs. HD DVD.
While historically, only a small percentage of products ever take full advantage of recall announcements, Dell sells all its products directly and analysts think it may see a far higher participation rate for replacement batteries than usual. (Dell also markets its own brand of HD monitors.)
In a recent annual Harris Poll prior to the recall announcement, Sony again finished in the top spot among "best brands" according to consumers, among all products and industries (HDTV Notebook, July 20, 2006).
