Sony claims battery recalls will cost them $200m

In a brief but pointed statement by Sony, hygienically entitled "Statement Regarding Sony's Support of Apple's Recall of Lithium Ion Battery Packs Used in Apple Notebook Computers," the mass manufacturer of defective batteries announced that the recalls we've been hearing so much about in the past few days are due to "microscopic metal particles in the recalled battery cells [that] may come into contact with other parts of the battery cell, leading to a short circuit within the cell. Typically, a battery pack will simply power off when a cell short circuit occurs. However, under certain rare conditions, an internal short circuit may lead to cell overheating and potentially flames." Ok, got it, we're with 'em, especially on the bit where they announced they're taking additional measures to ensure the safety of future batteries manufactured. So, howsabout putting a pricetag on all this carnage, eh? Well, between Apple's and Dell's six or so million units that are about to be recalled, it's going to set Sony back between ¥20 and ¥30 billion, or in dollar terms, between $134.2 and $201.3 million (or in per-unit terms, that's roughly $22 and $33 per battery). Now that, dear friends, is a spicy damned meatball.

P.S. -Ok, so howsabout that markup on those batteries? Even after shipping, support costs, and costs per unit, your $100-$150 battery is still only going to cost Sony as much as $33 per. As if we weren't already angry enough.

[Thanks, Tim]

[daddy_fizz @ Aug 25th 2006 2:15AM]

guess they should make them right the first time then...

or pay closer attention to the factories in china...

[teddy @ Aug 25th 2006 2:16AM]

How's it gonna affect PS3 shipments, that's all I need to know

[Julian Bond @ Aug 25th 2006 2:48AM]

What's going to happen to all the old batteries? And how do I get my hands on them?

[LukeA @ Aug 25th 2006 2:48AM]

My friggin' PowerBook battery was recalled today. That means I've got to spend 4-6 weeks tethered to the wall.

Better than being on fire, though.

[Scott Wu @ Aug 25th 2006 2:57AM]

You know how many items are made in China that you probably use daily huh fizz boy? Tons of stuff we, Americans, use everyday on a consistent basis, is made in China and no one says jack until something breaks. Yeah that is right we need a scapegoat. Blame the designers where the only real fault can be put and not the country from which he or she originates from or where an item is manufactured. Apparently the labor force has no control over the design, but thinking is hard.

[jbelkin @ Aug 25th 2006 3:04AM]

I have no idea of Sony's real cost on the batteries but I think factored in the equation are like rebates - a chunk are not going to respond - people either are clueless or with Dell's - their death rates are so high, each passing month means another X% are already out of commission and the last thing a bunch of corporations are gonna want are new batteries for non-functioning toxic landfill crap that's stacked up in the basement ...

[Keith L. Dick @ Aug 25th 2006 3:06AM]

***guess they should make them right the first time then...***

Exactly... Mass produce "JUNK" at the want for Profit then you get what you deserve...

[colton Miller @ Aug 25th 2006 3:43AM]

if thats all it costs sony then were getting gyped because they eat the original cost of the first battery and also its replacement. it probably only costs them 20 bucks to make one battery

[jimcord @ Aug 25th 2006 3:52AM]

Perhaps people ought to realize that we are all finally getting what WE deserve! No one, including myself is willing to pay price that a well designed, well manufactured, and properly paid labor item truly costs to design and build. To say that they (insert company name here) get what they deserve is so shortsided and ignorant! We got what we deserve because we want inexpensive items built in foreign countires with low labor costs, you have to expect that there will be shortcomings in build quality. I doubt anyone posting on this thread works for a dollar a day and nor would they, so what type of quality are you truthfully expecting? Discount stores did not become popular in out country from being unsuccessful. Consumers flock to them to get their inexpensive goods in droves. Where do you think all of that stuff is made, in forst world countires with first world labor? Companies are just not trying to maximize profits by going there to build, they are going there to build because consumers have shown and proven by our shopping patterns and habits that we are willing to pay the bare minimum for items. We too are guilty of our own greed as consumers, not just the companies that manufacture these items.

So many of the posters here throw around silly opinions with no hard data or fact to back them up. No one at all has made comment that this battery issue is effecting a fraction of one percent of users with a adverse event. Yes the possible negative outcome is real and could be very bad, but for most of use it will be business as usual as we wait a few weeks to get a proper replacement and send the defective unit back. it sure seems like we have just become a cynical and quick to jump to conclusion/opinion society. I certainly hope that none of these posters have ever made a error or done poor work in their past or present! Perhaps they would liketo see what it is like for people to make hasty opinions and comments about their past situations without knowing all of the needed facts to actually make a accurate and fair statement.

[andrew @ Sep 5th 2008 7:10AM]

do you work in one of the factories in china?
sounds like it... I wouldn't be happy if I had your job.

[Dude @ Aug 25th 2006 4:17AM]

jimcord: man your are SOOOOOOOO right.
Finally a mature comment!

[Jim @ Aug 25th 2006 4:25AM]

Flocking to discount products? That would explain all those recalled powerbooks then. People certainly don't go to apple because of price. They go for a well designed high quality product. Whether they get that any more is a different matter. And since when has Sony been a budget brand?

So when is my VAIO's battery going to be recalled then? Or did they make they're own properly?

[PeteC @ Aug 25th 2006 5:00AM]

Blimey this plus a PS3 flop could really fcuk sony up!

[mark @ Aug 25th 2006 5:24AM]

Don't forget insurance; the $ quoted may represent Sony's deductible portion of their Product Liability insurance...

[razorpit @ Aug 25th 2006 7:41AM]

Don't be surprised to see the retail price of the PS3 jump $33...

[Tobias @ Aug 25th 2006 10:04AM]

Wasn't Sony just going to pay part of the cost?

So it might be that Sony is paying 90% of the cost, or 50%, or 25% whatever... So in fact the $200 M might be in total cost 400 million or 250 million or so.

[tear @ Aug 25th 2006 10:31AM]

Well, as far as "Getting what they deserve", I can't say I'm thrilled with Sony after the DRM crap they tried to pull off. It's what kept me from getting a Vaio when I was looking at laptops last month.

Personally, I can no longer listen to legit CDs nor play a legit DVD on my main home computer because of them. (I've not had the time or patience to backup, format, and re-install everything I use daily. I *did* however, destroy the CD.)

[d3 @ Aug 25th 2006 12:12PM]

So much for the "unauthorized battery danger" myth.

[Ladderless @ Aug 25th 2006 12:39PM]

"Ok, so howsabout that markup on those batteries? Even after shipping, support costs, and costs per unit, your $100-$150 battery is still only going to cost Sony as much as $33 per. As if we weren't already angry enough"


C'mon... Let's look at the whole story. First, The $33 is their MARGINAL cost. 95% of the other costs were paid for with the original development. The tooling (I'm assuming most will still be able to be used), the production facilities, etc. etc. had to be paid for by something, and that's part of your $100 to $150.

That $33 battery cost will also be shipped in a different packaging, saving some $. They will also be shipped to the US in such huge quantities that they will be completely filling containers.

They are also looking at a HUGE production run for replacements, which means the $33 represents probably their lowest production costs ever, and enables them to buy some gigantic quantities from their suppliers.

I bet that the standard production run of these batteries, put into retail packages probably costs them more like $40 (I'm including the amortized tooling and other costs). They're going to mark them up to $75 or so when selling them to the US distribution entities (Dell, etc). If Dell pays $75 for a battery, why would they not sell it at least at a 40% margin, which puts it at $125?

Face it... Do you REALLY think that the notebook computer you just bought for $500, that includes an LCD display, hard drive, and everything else, contains a battery that represents $150 of the total cost? It costs a whole lot to get those extra batteries to you.

Bottom line... Most of what you buy these days costs about 20% to 25% of your purchase price to actually manufacture.

[futurepastnow @ Aug 25th 2006 1:25PM]

$150 might be what a new laptop battery costs you or me, but Apple and Dell probably weren't paying much more than $33 for them. If that.

[Karl Viklund @ Aug 25th 2006 3:37PM]

I think Sony is in trouble. Sony have been cutting 10.000 jobs and they borrowed 545 million Euro not long ago, PS3 is very expansive to develop and now this with 6 million batteries which will cost Sony 200 million dollar. I think that if the PS3 does not become a major major hit, Sony is really really in trouble. That's what I think.

[cory @ Aug 25th 2006 4:53PM]

Scott Wu, you may want to look at the first half of daddy_fizz's comment, take a deep breath, and repost.

[Rick @ Aug 25th 2006 10:33PM]

jimcord:
An Apple product is not exactly known for being a cheap generic brand. In fact, there is a price PREMIUM based upon perceived "quality". The people who buy Apples are probably in agreement of your statement regarding the mass-produced decline of everday products, thus they went with Apple. The problem is that this whole idea of an Apple being high-quality is now in question.

[Poita @ Aug 25th 2006 11:11PM]

Rick and Jim: People go to apple for a product that they feel is well designed, yet is cheap enough to readily be affordable. Look at the 'ipod city' stories that have been coming out recently, so you really think that the workers there are getting a decent wage in comparison to you or i? Apple uses those factories to help drive the cost of production down (while still keeping the price high enough to take a healthy chunk of change off each ipod/computer etc...)
I would wager that if apple moved their manufacturing facilities to the states and revised their pricing plan to reflect this move then they would see a marked drop in their customers, regardless of any percieved quality increases.

[Pete @ Aug 29th 2006 6:09AM]

$200M is a tough pill to swallow, but it's a pittance compared to the worst case scenario: an air crash where the investigation team attributes the cause to a fire started by a Sony-built battery. At that point, executives could only dream of solving things with $200M in payouts. The lawsuits alone would probably run into the billions; combined with the lost business and the now unavoidable recalls you're looking at a hit that would be a major, if not fatal, blow even to a company of Sony's size.

[JibJab @ Aug 31st 2006 1:49PM]

Jimcord, yes you're right that when things are built to the absolute minimum standard yes they are likely to go wrong before their time. But, do you really think a menial job on the factory line will be performed better in a first world country? Have you never bought a badly made American or European product?

Unskilled labour is the same the world over. Companies just go to the places where they can get products made to the same standards at a fraction of the cost. That's as basic as economics get.

[Liquid Ice @ Dec 13th 2006 11:02AM]

I agree with both of these comments. Yes, I agree that we have become a complacent country when it comes to purchasing products. However, Jim is right about the apple deal. No one goes to Apple OR Sony for notebooks because of pricing. They are the worst! If anything Dell has the best pricing and what do you get with a dell notebook? CRAP! Yes, Sony AND Apple both have issues with their products but they shouldn't have NEAR as many BECAUSE they charge a grand more for their products. Dell, Gateway, e-Machines, Compaq, etc all have an excuse for their poor product IF it IS a poor product in the first place. They sell their products for the most part under $1000! THAT'S GREAT; but Apple and Sony shouldn't be a part of this poor product placement. They say that they want to set the bar in quality in each of their mission statements yet make the same mistakes (given not as many) as the lower priced brands!
There are arguments for both sides and no one will TRULY win because ALL of these products are man-made and we all are guilty of human-error and we ALL need to remember that!