re: Sony 'i-mode' Java Phone recall
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>> Handset Recall Unlikely To Weigh Heavy On Sony
Reuters
14 May 2001
Sony Corp has become the latest victim of cellphone software glitches, but analysts said on Monday the cost of recalling its faulty handsets would be limited and the firm's brand name should help it bounce back.
Japan's dominant mobile phone service provider, NTT DoCoMo Inc, said on Friday it had suspended sales of Sony's latest handsets featuring an advanced version of its popular "i-mode" Internet access service due to a software fault.
DoCoMo said the glitch could affect a database downloaded into the Sony phone when a user is upgrading an application that accesses the Internet and employs Java, a versatile software technology that allows for enhanced functions.
Sony shares slipped in mid-afternoon trade, falling 3.04 percent to 9,580 yen, underperforming a 1.02 percent slide by the benchmark Nikkei average.
About 420,000 of the Sony phone model "SO503i" have been sold since its launch on March 9 this year, and will be replaced if customers wish, DoCoMo said.
Neither Sony nor DoCoMo specified the reason for the glitch or said where responsibility lay.
Sony, which currently holds a 10 percent share of Japan's handset market, said it was negotiating with DoCoMo on how to handle the problem.
Both firms declined to comment on when sales of the model were likely to resume or the potential cost of the recall.
The mishap follows another recall in February, when DoCoMo said it would replace 230,000 Java-enabled handsets manufactured by Matsushita Communication Industrial Co Ltd (MCI).
Masahiro Ono, an analyst at UBS Warburg, said Sony may have given its competitors a window of opportunity to increase their market share, but the company should be able to make a comeback with its strong brand name.
"If Sony introduces handsets with attractive designs or functions, it could quickly win back its market share," he said. "Sony has a good chance of catching up."
RECALL COST LIKELY LIMITED
Analysts agreed that the recall cost would be limited, given that MCI paid about 3.0 billion yen ($24.47 million) for the recall of 230,000 of its handsets.
Mamoru Takagi, an analyst at Societe Generale Securities, said the likely damage to Sony's coffers would be about five to six billion yen, although the figure would depend on the arrangement Sony reaches with DoCoMo.
"I don't think this will affect Sony's stock price," he said.
The suspension of sales comes just as the electronics giant has accelerated its drive to boost its presence in the handset market by forming an alliance with Swedish telecoms equipment maker, Ericsson.
Sony and Ericsson, the world's biggest producer of mobile networks and the third-largest handset supplier, last month announced they would make mobile phones together. <<
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