Can Sony stop the rot?

At the end of August Sony went to great pains to assure the markets that it was working closely with notebook manufacturers and that there would be no further recalls required. The recall of 4.1 million Dell and then 1.8 million Apple notebooks was that end of it we were assured. Despite incurring estimated costs of $258 million to facilitate the swap out and replace the batteries the market eventually took the news in its stride – “No More Recalls” was the mantra from Sony.

So it was a surprise this morning when Toshiba announced that it too, would begin the process of recalling 340,000 laptop computers. Unlike Dell or Apple, Toshiba said there was no risk of the faulty batteries catching fire – probably the last thing any wise PR person would say, given the recent outcrop of self-igniting laptops.

Toshiba said the recall would not hit its bottom line – though how replacing shipping freighting the devices will not affect the bottom line is anyone’s guess.

Once again it looks like Sony will be footing the bill for the call out.

Sony has suffered a severe blow to its brand image, this third major recall follows hot on the footsteps of its announcement that it critically short of vital components for the PlayStation 3 so will delay the launch of the product in certain markets around the globe, and severely restrict the availability in the markets it does ship to.

Sony stock traded down 0.8 percent on the Tokyo Stock Exchange off 10 percent since August.

Hard as it may be, and Japanese companies in particular have this problem, sometimes it’s better to unload all your pain onto the market at the same time, in one go.

Companies like Sony are highly consumer focussed – consumers don’t want to be continually reminded that something from a trusted brand like Sony is likely to catch fire or worse. Similarly, delays in their PlayStation 3 product introduction will further tarnish the brand and infuriate consumers – with the holiday season fast approaching parents will shop around for alternatives for their children this year. Of course we’ll see stories about PS3’s changing hands for $5000 on eBay, but these will be exceptions and most will just buy one of the ‘other’ brands.

Under the leadership of Sir Howard Stringer Sony gained nearly 40 percent in value over a short six-month period. However, since May the company has been caught in a steep decline.

Clearly, Sony still needs to refocus and work hard on re-establishing its edge in the consumer market. Some may say that the battery incidents have been bad luck – perhaps it’s a business unit Sony needs to get rid of  as quickly as possible.

With the quality and production capabilities of the Chinese ‘on par’ with the Japanese, perhaps its time for Sony to go back to it roots and focus on design and marketing, sell off its factories and look over the water to a company that’s managed to do the same – Apple.