Product Recall

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 computers configuration.
• http//www.cpsc.gov/CPSCPUB/PREREL/prhtml06/06245.
  html

• 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

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.

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 Apples 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.

4
References

• Kapica, J. (2006, September 29). Will your laptop
  explode? . The Globe and Mail. Retrieved November
  4, 2010, from www.theglobeandmail.com/news/technol
  ogy/article845157.ece
• Apple Battery Recall Official. (n.d.). Gizmodo,
  the Gadget Guide. Retrieved November 4, 2010,
  from http//gizmodo.com/196422/apple-battery-recal
  l-official
• 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 http//www.cpsc.gov/cpscpub/prerel/prht
  ml06/06245.html
• Apple Recall of iBook and PowerBook Computer
  Batteries. (n.d.). CPSC Home Page. Retrieved
  November 4, 2010, from http//www.cpsc.gov/cpscpub
  /prerel/prhtml05/05179.html
• 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 http//business.timesonline.co.uk/to
  l/business/industry_sectors/technology/article6195
  73.ece
• Kelley, R. (n.d.). Apple to recall 1.8 million
  notebook batteries - Aug. 24, 2006. Business,
  financial, personal finance news - CNNMoney.com.
  Retrieved November 4, 2010, from
  http//money.cnn.com/2006/08/24/technology/apple_r
  ecall/index.htm
• Korean Air Bans Apple, Dell Computers on Board.
  (2006, September 6). Hankooki Times. Retrieved
  November 4, 2010, from http//times.hankooki.com/l
  page/biz/200609/kt2006090517585411880.htm