The defective laptop battery imbroglio that gave Dell (DELL) a drubbing has spread. Apple Computer (AAPL) said on Aug. 24 it would recall as many as 1.8 million batteries sold with its notebook computers. The announcement follows a similar revelation last week from Dell over the recall of 4.1 million notebook batteries.
The U.S. Consumer Product Safety Commission said Apple sold 1.1 million notebooks with affected batteries in the U.S. and another 700,000 outside the U.S. The problem, says the CPSC, is that the lithium-ion batteries can overheat, posing a fire hazard. Apple has received nine reports of batteries overheating, two of which included minor burns to people handling the machines. None of the injuries reported were serious.
MORE BAD APPLES? Apple shareholders appeared to shrug off the news, with the stock finishing the day 50 cents higher, at $67.81. Still, the announcement is the latest in a string of unflattering disclosures from a company that in recent years has dominated headlines with hip products, rising shares, and surging sales.
In recent months, Apple has gone public with the discovery of what it called "irregularities" in how it handled stock options and the results of an investigation into allegations its music players are being manufactured under sweatshop conditions. And just on Aug. 23, the company said it will pay $100 million as part of a settlement of a patent dispute with Creative Technology (CREAF).
The computer models affected are the 12-inch iBook G4, the 12-inch PowerBook G4, and the 15-inch PowerBook G4, none of which are current models. The CPSC said the machines were sold during a period starting in October, 2003, and ending in August, 2006. In some cases the batteries were sold individually. More information about the recall and replacement program can be found at Apple's support site. Apple spokesman Steve Dowling said there won't be financial impact felt by Apple.
The same can't be said of Sony (SNE), the Japanese consumer electronics giant responsible for the defective batteries. Sony has said it expects costs of between $172 million and $258 million for replacement batteries and shipping expenses. Meanwhile, Japan's government has given Sony and Dell until the end of August to investigate the battery troubles, report their findings, and say how they'll prevent future instances—or face a fine, the Associated Press reported.
POWER DEMANDS. This battery recall underscores rising demand for batteries that cram loads of power into a small package. "Battery manufacturers are under huge pressure because of the increased demands that electronics are putting on their product," says Sara Bradford, a Frost & Sullivan analyst. "More devices are encompassing more applications, and that's putting a lot of stress on the power sources."
Part of the problem, she notes, is the lack of alternative power sources (see BusinessWeek.com, 5/18/06, "Samsung's Fuel-Cell Gambit"). "There is a lot of work being done on fuel cells, especially direct methanol fuel cells, but the biggest issue there is that they haven't been approved for use on commercial airliners, and that's not going to go well with business travelers," Bradford says. "You may see some fuel cells trickle into notebooks on the market by the end of the decade, but it certainly won't be a mainstream thing by then."
FLIGHT RESTRICTIONS. At least one airline is limiting the in-flight use of the affected Dell batteries. Australia's Quantas Airways said passengers carrying affected Dell notebooks would not be allowed to charge their batteries while in flight, The Sydney Morning Herald reported. Passengers would be allowed to carry Dell machines as checked or cabin baggage, but will be allowed to use them only through the aircraft power supply available in some first- and business-class cabins once the battery has been removed.
Notebook battery recalls are generally routine, but rarely are they carried out on such a large scale. This is Apple's third battery recall in as many years, but in the previous two cases the numbers involved were much smaller. A May, 2005, recall of iBook and PowerBook batteries sold between October, 2004, and May, 2005, affected 128,000 batteries manufactured by LG Chem, a division of LG Electronics (LGE) of South Korea. A recall issued in August, 2004, affected 28,000 batteries from LG Chem, all of which had been manufacturing in a one-week period in December, 2003. In 2001 it recalled an outdated AC adapter sold between 1998 and 2000.
Apple is not alone in having a long history of notebook battery recalls. Dell's latest recall, the largest in computer industry history, was its fourth involving batteries. Dell recalled 22,000 notebook batteries in 2005, and 284,000 batteries in 2001, another 27,000 in 2000 according to CPSC records. Dell has also issued recalls of AC power adapters sold with notebooks three times, once in 1997 and twice in 2004.
HP OFF THE HOOK. Hewlett-Packard (HPQ) recalled 135,000 batteries sold with HP and Compaq-branded notebooks in October, 2005, and 15,700 batteries in April of this year. Prior to its acquisition by HP, Compaq recalled 55,000 notebook batteries.
But HP is sitting pretty this time around. HP's engineers tested the batteries in question and decided they didn't meet the company's reliability standards, company insiders said. The batteries were disqualified for use in HP products.
Gateway (GTW) too may emerge unscathed from this recall. "We do not believe our systems are at risk for the same malfunctions that caused our competitors to issue battery recalls," the company said in a statement. "It appears that a combination of factors led to the fault requiring the recalls, and this combination is not present in our systems."
Hesseldahl is a writer for BusinessWeek.com in New York
With Peter Burrows in Silicon Valley
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