Much has been said about the potential for the blogosphere and cyberjournalism to reshape the flow of information and opinions. But for a case study of how these new media can impact the business world, consider the biggest event to hit the computer industry in recent weeks. Yes, we're talking about those burning laptop batteries and the decision by Dell (DELL) and Apple (AAPL) to recall more than 5 million of them—the largest recall of its kind in the history of the consumer-electronics industry.
The cybermedia didn't merely expose the dangers of computers catching fire. They kept the heat on the manufacturers to do something about it and helped the U.S. Consumer Product Safety Commission (CPSC) conduct an investigation into the burning batteries.
It has long been said that the Internet spreads information like a prairie fire. In this case, the Web helped snuff one out.
Back-click to Wednesday, June 21, at 1:22 p.m. The Inquirer, a British "tabloid-style" news site for techies, published a series of shocking photographs showing a Dell notebook computer in flames at a tech conference in Japan. The photos and an account of the incident came from "Gaston," the pseudonym of a loyal Inquirer reader who did not want to be identified because he's in the computer business, according to Mike "Mad Mike" Magee, The Inquirer's founder/editor.
BUILDING PRESSURE. Getting the scoop was a thrill for Magee. He had previously started up another well-known techie news site, The Register, but left in 2001 to launch The Inquirer, which now has about 2.5 million unique users and delivers about 14 million page views per month. This story showed just how potent his brand of cybermedia can be. "The power of online journalism is, of course, its immediacy and worldwide potential," says Magee.
The Inquirer posting ricocheted around the Web. Was it a hoax? Was it real? Industry analysts were soon e-mailing their take to mainstream reporters and investors. "I must have had two dozen people e-mail it to me the day it came out," recalls Richard Stern, an associate director in the CPSC's Office of Compliance and Field Operations, who headed up the investigation.
It wasn't as though Dell and the CPSC were completely caught by surprise. Late last year, after PC users reported smoldering batteries, Dell and the CPSC recalled 22,000 of them. Dell received six more reports of battery problems after that recall was completed, and worked with Sony (SNE), the battery supplier, to try to identify the problem and make sure it didn't recur.
But in cyberspace the race was on to dig out every last byte of "truth" about those flaming PCs. Gadget news blogs like Gizmodo and Engadget spat out facts and rumors with equal zeal. They were relentless advocates for the consumer, too. On July 31, Engadget posted photos of a Dell notebook that had caught fire in Singapore. Its comment: "We'll keep posting these until we see a recall or a solution, so please, Dell, treat 'em right."
DELL'S DAMAGE CONTROL. By then, Dell was working closely with the government to figure out the scope of the problem. It turned out the glitch was the same as it had been late last year: metal particles inside the battery were causing the problems. Apple's problems with overheating batteries had been cropping up in the online media during the spring and summer as well. The CPSC's Stern says Sony connected the dots and figured out which of its batteries and which of its customers were affected. After The Inquirer's scoop and a stepped-up investigation, Dell and Sony proposed a second recall to the CPSC.
Once again, the Inquirer scooped everyone. On Aug. 13, writer Theo Valich reported that another recall was on the way. Magee says the leak came from a Dell insider, whom he refuses to identify. "I attribute being on top of the story to old-fashioned print journalism standards—cultivating, and, if you'll excuse the pun, not burning such contacts," he says. The formal recall was announced a day later, on Aug. 14.
Once Dell announced the recall, it, too, harnessed the Web to reach out to the disgruntled computing masses. On Aug. 14, the company set up a Web site (www.dellbatteryprogram.com) telling customers how to get a replacement battery. On its customer-service blog, (www.direct2dell.com), Dell also published the first of nine postings (so far) from executives and staffers about the recall. These included blow-by-blow descriptions of Dell's response from Alex Gruzen, senior vice-president of the company's Mobility Product Group, and a detailed explanation of how lithium-ion batteries work from Forrest Norrod, vice-president of engineering.
EMBRACING THE BLOGOSPHERE. The company also elicited dozens of comments from customers, some of whom were plenty irked. On Aug. 15, George Johnson demanded to know why Chairman Michael Dell hadn't responded to questions about the battery problems at a press conference the previous day in Sydney, Australia. "When he was asked about the recent problems and if there were any developments, he did not volunteer the information that a new battery recall was in the works. If he was so concerned about customer safety, why was the announcement held over until after the press conference was over?" asked Johnson.
But most people who commented praised Dell for its response. "I commend Dell for looking out for the consumer on this issue," wrote Jim Jones. "I have been fearful of leaving my system on while unattended. It's nice that I can leave my system on overnight and not have to worry about my house catching fire."
Dell credits the blogosphere for helping it get through the crisis. "Information travels around quickly," says spokeswoman Gretchen Miller. "Also, it's another channel to get the message to our customers so they can be safe."
BLOG READER, BEWARE. Ditto for the CPSC, which for years had only rudimentary tools to gather information—combing through local newspapers for hints of product malfunctions, say. Now it's swamped with information from the Web—practically the moment something happens.
"More information in our line of work is always better," says Stern. "But it also makes our jobs more difficult. The more information we have, the more we have to go through." He cautions that just because the blogosphere circulates a report of a faulty product, that doesn't mean it's true. Still, he says, "All of this information is great and important, and we want it."
Hamm is a senior writer for BusinessWeek in New York
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