Will Panasonic and Sanyo Gain at Sony’s Expense?

As the recall of Sony notebook PC batteries spreads, encompassing more PC vendors and an increasing number of affected models, one wonders how seriously the Sony brand and its business as a battery purveyor will suffer.

MarketWatch’s Andrew Simons considers the question, poses it to a few analysts, and comes away with an ambiguous picture.

Roger Kay, president of market-research firm Endpoint Technologies Associates, believes Sony is in danger of losing considerable patronage in the lithium-ion battery business. Says Kay:

Sony’s brand is severely damaged. I think it’s going to be a question whether they can be in the battery business at all.

Still, he doesn’t think Sony’s is about to get whacked overnight. Says he:

Given the nature of the relationship, in the real world the way that it plays out is that the [computer manufacturers] decrease what they buy from Sony. They’ll say, ‘We used to take two million from you and three million from Sanyo. Now we’re going to take four million from Sanyo and one million from you. And that’s punishment’."

Indeed. One can understand why notebook vendors would want to punish Sony, too, not just for selling defective battery technology, but also for occasioning the logistical nightmare of a major recall program.

Even so, switching battery-technology suppliers is not like changing socks, as Eric Ross, an analyst with ThinkEquity Partners, explains:

They could choose another battery supplier, but Sony is a huge supplier. They screwed up, but they didn’t screw up royally. Switching battery suppliers takes time.

He’s right. It does take time, and it isn’t a decision that should be made in anger. I think, though, that it’s debatable as to whether Sony merely "screwed up" or "screwed up royally." I’m not sure the notebook PC vendors will be able to make such a fine distinction.

At the end of the day, the scenario Kay envisions, with manufacturers gradually and methodically shifting their business to other vendors, including Panasonic and Sanyo, is a likely outcome. They won’t be taking this decision as a reprisal or to exact vengeance; instead, they’ll be doing it to mitigate risk and to protect their interests, including their own brands.

It won’t be personal. It’ll be strictly a business decision. 


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