Sony Batteries

It looks like at least 4 million Dell notebook batteries are being recalled, all of which appear to be made by Sony. Worse news though, Sony also supply batteries to other companies thought to include Apple, Lenovo and HP.

If all of these batteries end up being recalled too, then the cost to Sony would be enormous, their reputation for batteries might never recover. More seriously could this affect Sony as a company? Given the increasing development costs of the PS3, probably a long fight for dominance in the Blue Ray Vs HD-DVD mess and problems in other areas, how much more can Sony as a company take?

I don’t think a financial collapse is very likely, the company is, after all, huge and has substantial revenues from its different divisions. Instead think about a loss of confidence in the company as a single unit. Normally companies should form a grouping that is most financially efficient, this holds as long as investors are confident of the efficiency of the structure of the company. If they loose confidence or people start crunching numbers and find that the parts are worth more than the whole, then questions start getting asked. I think Sony is getting to that point, there seem to be increasing problems with internal disagreements and communication seems to be an issue. This suggests that the company may be too large and too diverse. If it had not been a Japanese company I would have expected a de-merger long since, but Japanese investors behave in different ways so this cannot be certain to happen.

However the advantages are clear. For example, there appears to be substantial tension between the media side of the company (Sony Pictures, Sony BMG) and the electronics side. On the one hand offering devices to play and share music, on the other selling music but discouraging this sharing. This tension is probably one of the reasons that Apple was able to win in the portable music player market. There were other reasons too of course, but the fact that you could easily copy music to the ipod and it was really hard with the Sony device cannot have helped Sony to sell players. In this case it appears that the supposed advantages of integration are actually disadvantages.

Markets reward efficiently run enterprises, in this case it appears that the company is less than efficient, so I expect something will happen. What form this takes is difficult to say, but I intend to watch carefully; It will be interesting to see what happens.

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