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Product Recall

Product Recall

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Product Recall

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  1. Product Recall • FDA Recall Date: August 24, 2006 • Based upon a tendency of the lithium-ion batteries to overheat which poses a fire hazard to consumers. • Apple has received nine reports of batteries overheating, including two reports of minor burns from handling overheated computers and other reports of minor property damage. No serious injuries were reported. • The batteries become dangerous where particles in the battery cells come into contact with other parts of the battery cell, creating a short circuit. Sony said a battery would typically cut out if this occurred. However under certain circumstances it said a short circuit could lead to cells overheating and possibly flames, depending on the computer’s configuration. • Apple Announces Recall of Batteries Used in Previous iBook and PowerBook Computers Due To Fire Hazard Rechargeable, lithium-ion batteries with cells manufactured by Sony for certain previous iBook G4 and PowerBook G4 notebook computers only. The recalled lithium-ion batteries were used with the following computers: 12-inch iBook G4, 12-inch PowerBook G4 and 15-inch PowerBook G4. Consumers should remove the battery from the computer to view the model and serial numbers labeled on the bottom of the unit Battery Cell Manufacturer: Sony Energy Devices Corporation of Japan Recall affects 1.8 million Apple battery packs assembled in Japan, Taiwan and China ETM591 Andrew Dunagan 11/4/10

  2. Management Issues • Proactive/Reactionary measure - Apple recognized after receiving nine reports of batteries overheating causing minor burns in some cases and some minor property damage in others. Proactive since the recall was issued immediately. • Apple advised consumers to stop using and remove the recalled batteries immediately, then to plug the laptops into the AC adapter until replacement received. • Consumers were advised to contact Apple to arrange for a replacement battery, free of charge. • Apple sent a replacement battery to the consumer as well as a postage-paid return envelope for the recalled battery. • Second-largest computer/electronics recall in history. ETM591 Andrew Dunagan 11/4/10

  3. Impact of Recall • Apple initiated the recall and suffered very minor reputation damage considering there was a similar recall a year earlier affecting the same computers and batteries but in this case manufactured by LG. • Apple stock was just slightly lower after the recall announcement. • Apple spokesman mentioned the recall would have “no material impact” on Apple’s finances. • Sony shares lost value after the announcement of the recall by Apple, a clear indication of reputation damage. • Sony said its recent recalls - 1.8 million batteries for Apple and 4.1 million for Dell announced last week - will cost the company between $172 million and $258 million. • Sony announce it has since introduced additional safeguards into its battery manufacturing process to address the problem. • No known legal consequences to date. • Korean Air prohibited the use of PowerBooks and iBooks in-flight citing the possibility that the computer batteries might explode. ETM591 Andrew Dunagan 11/4/10

  4. References • Kapica, J. (2006, September 29). Will your laptop explode? . The Globe and Mail. Retrieved November 4, 2010, from • Apple Battery Recall Official. (n.d.). Gizmodo, the Gadget Guide. Retrieved November 4, 2010, from • Apple Recall of Batteries Used in Previous iBook and PowerBook Computers Due To Fire Hazard. (n.d.). CPSC Home Page. Retrieved November 4, 2010, from • Apple Recall of iBook and PowerBook Computer Batteries. (n.d.). CPSC Home Page. Retrieved November 4, 2010, from • Bolger, J. (n.d.). Sony shares slide on Apple battery recall - Times Online . The Times | UK News, World News and Opinion. Retrieved November 4, 2010, from • Kelley, R. (n.d.). Apple to recall 1.8 million notebook batteries - Aug. 24, 2006. Business, financial, personal finance news - Retrieved November 4, 2010, from • Korean Air Bans Apple, Dell Computers on Board. (2006, September 6). Hankooki Times. Retrieved November 4, 2010, from ETM591 Andrew Dunagan 11/4/10