Dell raises battery prices after LG Chem factory fire
By Jonathan Schlaffer
With the way that laptop batteries have a tendency to explode, overheat or catch on fire; it’s no wonder that a factory finally went up in flames. Dell and other laptop manufacturers are seeking other sources for battery production. LG Chem is the second largest battery manufacturer in South Korea and may affect up to 40% of shipments from Taiwan.
The overall effect is that every laptop manufacturer on the planet will be hit by the shortage in one way or another. Dell declined to get in to specific details to Yahoo News but did say the effect on its total shipments should be minimal. Prices have gone up for customers purchasing extra battery packs but how much the prices increased remain a mystery.
The company would also not disclose if this would have any affect on their other products; in reference to fully built laptop systems.
Dell spokesman Jess Blackburn said, “the industry is experiencing battery supply constraints because of these problems. Therefore, pricing is being impacted by current availability. But we are working with our partners throughout our supply chain to reduce the impact on our customers.”
Mike Hockey speaking for HP said that his company as well as other manufactures are still sizing up the situation but are working closely with the “battery cell industry” to acquire additional batteries.
Additional peripherals, including battery packs make up about 17% of Dell’s total revenue. However, the cost of batteries may be offset by falling prices of other components.
As for how long the shortage will continue, LG Chem will have its Ochang factory back to fully operational status in “two to three months.” It’s not clear how long the current shortage will last but it will take a while before additional sources are able to ramp up production, I’ll give a shot-in-the-dark guess of two to three weeks.
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According to the Times, battery experts are claiming that the lithium-ion batteries that all of us use in our laptops, cell phones, and other mobile devices, are “inherently dangerous and must be changed to ensure safety.” Exhibit # “Battery companies are still learning because the technology is young, but there is a fundamental flaw with the way lithium-ion batteries are currently designed and if the companies genuinely care about safety, they need to completely change their production methods. A lithium-ion battery is quite a dangerous little box of energy,” Professor Wakihara said. exhibit 1
“No one died, but some of the laptop users were severely injured, CPSC spokeswoman Julie Vallese said.” exhibit
“The trouble was not because of Dell’s system design,” the Yomiuri newspaper quoted Merritt as saying at press conference on Tuesday in Tokyo. “The defect occurred in the production process of the batteries” made by Sony, he said. The Financial Express, Tuesday, September 12, 2006 ‘Dell blames Sony for battery recall’ Bloomberg, Tokyo, Aug. 29, 2006 docket 101 exhibit 17, exhibit 19
“We can’t deny that the defect occurred in the production process of the batteries, “ said Tokyo-based Sony’s spokesman Yoshikaza Ochiai. “But the defect was somehow affected by Dell’s system environment.” docket 101 exhibit 108
A Revisit to Lithium-ion Safety, Sam Stimson (expert witness) “the “battery guy” at Dell for 11 years”” states in part “… but the number of defective parts per million (dppm) - cell faults in the field have also escalated.” “Sam explained, is that you have a one in a million chance of something happening to the cell that could create a dramatic happening. Such a happening could be a cell fully venting. Referring to Mr. Takashita’s (PSDS author, expert witness) data in an earlier conference session, Sam mentioned that with 740 million cells produced last year, there could be the probability of having 740 “happenings” that are ”not very nice.”” A motion to compel interrogatory responses had been filed. docket 95 exhibit 27, exhibit 59
The book Direct from Dell Strategies That Revolutionized an Industry, by Michael Dell Chairman and CEO, Dell Computer Corporation with Catherine Fredman, Copyright 1999; page xiii, pages 50-56. Addendum 5“No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews.” copyright page preface Ibid. Page xiii “1993 Suffering from the pains of extremely rapid growth, Dell cancels a secondary offering and posts its only quarterly loss resulting from a temporary withdrawal from the notebook market, its exit from retail stores, and a restructuring of European operations.” Page xiii Ibid.
“We also had introduced one of the thinnest and lightest sub/ notebook computers available. But as our products got increasingly more ambitious in their technical complexity , it became apparent to me that we didn’t have the capability inside the company to get the products to market on time, much less designed correctly.” (emphasis added) page 50 Ibid. docket 80 Addendum 5
“The first difficulty we encountered was with the design of a new product. Basically, our approach to designing notebooks was almost exactly the same as our approach to designing desktops, which makes about as much sense as treating children like mini-adults. Strange as it sounds, this happened in large part simply because some engineers from our desktop division transferred into notebooks.” page 50 Ibid. docket 80 Addendum 5
“Clearly, this wasn’t the right way to approach the design. Designing a desktop is not the same as designing a portable computer. In a desktop there are between thirty and thirty-five parts; in an average notebook, there are twice as many. And the parts don’t all work together in a portable the way they do in a desktop PC.” page 51 Ibid. Addendum 5
“* The delay was due to feature creep, which occurs when too many features are added to a product until, ultimately, it becomes over designed.” footnote page 51 Ibid. Addendum 5
“We also knew , though, that correcting the products by redesigning them, validating the new design, manufacturing them, and delivering them would have taken so long that by the time we got them out the door, we’d be at the tail end of the product life cycle.” page 51 Ibid. docket 80 Addendum 5
“And while other areas within the company were doing well, morale in the notebook group was, as you’d expect, pretty poor. The engineers had spent a lot of time developing the products we’d just canceled, and they felt frustrated and demoralized when their hard work wasn’t brought to fruition.” page 52 Ibid. docket 80 Addendum 5 “Communicating is one of the most important tools in recovering from mistakes. When you tell someone, be it a designer, a customer, or the CEO of the company, “Look, we’ve got a problem. Here’s what it is, here’s why it happened, and here’s how we’re going to fix it, …” page 52 Ibid. docket 80 Addendum 5
“We went to each customer affected by the notebook situation and made it right.” page 53 Ibid docket 80 Addendum 5 “Here’s why you shouldn’t be nervous about doing business with us.” page 53 Ibid. docket 80 Addendum 5 “You’re not a customer for just one transaction. You’re a customer for life.” page 53 Ibid. docket 80 Addendum 5 “There’s no question about who’s accountable if there’s a product problem, and no question about who’s responsible for fixing it. Because of a direct model, we were able to contact our customers quickly and directly, and as a result, recover from the problem fast.” page 53 Ibid. docket 80 Addendum 5
“The notebook problem also illustrated how we utilize the direct model within the company.” page 53 Ibid. docket 80 Addendum 5 “One of the keys to dazzling and delivering on the Latitude was the lithium ion battery.” page 53 Ibid. docket 80 Addendum 5 “In January 1993, soon after we launched Dell in Japan, I met with the folks at Sony.” Page 53 Ibid. docket 80 Addendum 5
“… toward the end of the meeting, a young Japanese man ran up to me and said, “Mr. Dell, please wait one minute. I’m from the energy power systems group and I need to talk to you.” “Energy power systems?” I thought. “Is this guy going to try to sell me a power plant?” page 54 Ibid. docket 80 Addendum 5
“Still, I was intrigued, so I stayed and listened to what he had to say. He started showing me chart after chart describing the performance of a new battery technology called lithium ion. Suddenly I realized his goal: to sell lithium ion batteries to Dell for our notebooks.” page 54 Ibid. docket 80 Addendum 5 “If this was true, I wanted to put lithium ion batteries in every notebook computer we made.’ page 54 Ibid. docket 80 Addendum 5 “They had never built a battery with the cell size we wanted and the number of cells in a battery pack that we needed, and they saw notebooks as a tremendous opportunity to move into a new market.” page 54 Ibid. docket 80 Addendum 5 “Lithium ion became a breakthrough technology.” page 54, Ibid. docket 80 Addendum 5
“As easy a decision as this might seem, in retrospect, lithium ion was a brand new technology, and therefore a risk.” pages 54-55 Ibid (emphasis added) docket 80 Addendum 5
“And even though the people at Sony kept coming back with the right answers to our questions, no one really knew how lithium would hold up.“ page 55 Ibid. (emphasis added) docket 80 Addendum 5 “The Latitude with the lithium ion battery was introduced in August 1994.” page 55 Ibid. docket 80 Addendum 5
The book Direct from Dell Strategies That Revolutionized an Industry was provided to Defendants. Michael Dell was a listed expert The book Direct from Dell Strategies That Revolutionized an Industry docket 80 Addendum 5 , by Michael Dell Chairman and CEO, Dell Computer Corporation with Catherine Fredman, Copyright 1999 was provided to Defendants. Satisfying plaintiffs requirements regarding Michael Dell’s expert opinions as quoted above per Fed. R. Civ. P. 26(a)(2)(B). The book reviewed his qualifications and the gist of his opinion.