Dell customers flock to replace notebook
Notebook computer owners began calling Dell Inc. and surfing to a special company Web site Tuesday to get replacements for lithium-ion batteries that could cause their machines to overheat and even catch fire.
The world’s biggest computer maker said it began shipping replacements Tuesday for 4.1 million recalled batteries. Dell said it received more than 100,000 phone calls, 23 million Web site hits and took 77,000 orders by late in the day.
Orders were being filled on a first-come, first-served basis, said spokesman Ira Williams. He couldn’t estimate how long customers might have to wait. It could vary by the model of their notebook, he said
The replacements are coming from Sony and a handful of other battery manufacturers.
The record-setting recall — the largest electronics-related recall involving the federal Consumer Products Safety Commission — followed reports of Dell notebooks suddenly catching fire. It is the latest misstep by Dell, including two previous battery recalls, complaints about poor customer service, and slowing sales growth, all of which has weighed heavily on Dell’s once-lofty stock price.
“It’s bad news on top of bad news for Dell,” said Ted Schadler, a technology analyst for Forrester Research.
The batteries were supplied to Dell by Japan’s Sony Corp., and Dell officials hinted that Sony would bear the cost of the recall, which analysts estimated at $200 million to $400 million — the companies wouldn’t say.
Sony acknowledged its role in the incident, but said the reports of a half dozen burning laptops were infinitesimal out of the millions of machines that Dell sells each year.
It was unclear whether Dell’s problem would spread to other PC makers. Sony supplies battery cells for its own notebooks and those of other computer manufacturers.
The configuration of cells differs from one manufacturer to another, but the building blocks — the cells, which resembled small rolled up sheets of metal — are the same, according to Sony.
Experts said the problem appeared to stem from flaws in the production of the batteries. They said during manufacturing, crimping the rolls left tiny shards of metal loose in the cells, and some of those shards caused batteries to short-circuit and overheat.
Sony spokesman Rick Clancy said shards are common in battery cells but usually just cause the battery to stop working.
“We have taken steps to address the situation … to Dell’s satisfaction,” Clancy said. He declined to elaborate on what the company did to fix the problem.
Lithium has been replacing nickel-cadmium and other materials for batteries used in laptops and also digital cameras, music players, cell phones and other gadgets since the early 1990s. The smaller, lighter batteries produce more power to drive laptops with high-resolution screens and phones with advanced features.
There have been previous reports of problems with lithium-ion batteries. Last year, Apple Computer Inc. recalled batteries made by South Korea’s LG Chem Ltd.
And in 2004, the Federal Aviation Administration banned shipments of lithium batteries from the cargo holds of passenger planes because of a potential fire hazard, when they’re shipped in bulk. Passengers, however, are still allowed to carry laptops or cell phones on planes.
FAA spokeswoman Tammy Jones said the agency is continuing to review the possible hazard.
Roger Kay, an analyst with Endpoint Technologies Associates, said the Dell recall was not likely to lead manufacturers to avoid using lithium batteries.
“Well-made lithium-ion batteries are perfectly safe,” he said. “This is a manufacturing problem and not an indictment of lithium-ion technology.”
Sony provides battery components for other computer makers, including Lenovo Group Ltd., which said it gets a “handful” of reports each year of overheated batteries but does not plan a recall. Spokesman Bob Page said Lenovo’s machines have other features, including software that disables the machine if it detects unsafe conditions.
Dell has been using Sony battery parts longer than other manufacturers, and Lenovo and others may eventually develop similar problems, Kay said.
Apple, which analysts say also uses Sony battery cells, said it was investigating the situation. Hewlett-Packard Co. said it does not use Sony batteries and was not affected by the recall. Fujitsu said it builds its own batteries.
The Dell recall covered batteries in some of its Latitude, Inspiron, XPS and Precision mobile workstation notebooks shipped between April 1, 2004, and July 18 of this year.
Investors brushed aside the headlines about the recall, pushing up shares of both Dell and Sony in Tuesday trading.
Dell shares rose 84 cents or 5 percent, to close at $22.08 on the Nasdaq Stock Market, and Sony shares gained 62 cents to close at $45.43 on the New York Stock Exchange.
But beyond the one-day rise in stock price, analysts warned that the reputations of Dell and Sony could suffer more lasting damage.
Cindy Shaw, an analyst with Moors & Cabot, said the recall could steer consumers away from Dell at back-to-school time. She also said business customers might not be forgiving.
At lunchtime Tuesday, a handful of customers browsed through Dell’s first store, in an upscale Dallas mall. Dale Topham, a Dallas resident who was picking up a repaired computer, said the recall wouldn’t make him less likely to buy another Dell.
“I don’t worry because they’re trying to take care of it,” he said.