Intel Corp., the world's largest semiconductor maker, was already the butt of jokes on the Internet when International Business Machines Corp. announced last week that it would suspend sales of computers made with Intel's Pentium chip because of a bug affecting mathematical calculations.
IBM's action left Intel complaining that Big Blue was exaggerating the seriousness of the flaw, but IBM contended it had found the bug to be more serious than Intel had disclosed. Because it failed to disclose upon discovering it last summer, Intel was in a poor position to wage a credibility war with IBM. Its stock plunged.
Is the damage to Intel serious and permanent? How could it have handled the crisis better, and what should it do now?
Erik Jansen,
Analyst, Alex. Brown & Sons,
San Francisco
Intel has really erred in its handling of the situation from a customer satisfaction and PR viewpoint.
It's interesting to see a company like Intel spend literally hundreds of millions of dollars on advertising solely targeted at buying huge brand name awareness of "Intel Inside" and the Pentium processor name, and yet, when they hit a bump in the road, it would appear they have lobotomized all their marketing people, if not shot them, and reverted back to engineer-type behavior.
To see if they've learned anything, let's see if Intel takes advantage of the PR they are getting.
What if they were to take an ad in the Wall Street Journal and say we certainly appreciate the concern and inconvenience the flaw in our Pentium chip has caused our customers, saying we would like to offer a $50 off or $100 off coupon on any Pentium machine? Suddenly you're thinking about taking an angry audience and turning them into potential customers.
Now they're perceived as arrogant guys who are too cheap to keep the customer happy. Intel's going to tell you, because you're not a rocket scientist doing matrix math, you're not good enough?
Satish Tripathi
Chairman, Computer
Science Department,
University of Maryland
People's perception is that Intel has really not reacted the way they should have. The latest thing I've heard is they're going to come out with some level of software fix.
If you're doing precise computing, that's a problem. The software fix would slow down computation.
Intel is a good company. If they deal with this properly, I think it won't hurt them permanently.
Robert J. Stone
Crisis management specialist,
The Dilenschneider Group,
New York
Intel is going to have to launch an information campaign for the investment community and most of all for the consumers. They [the customers] are going to think twice before they buy a computer with that chip in it.
Until their customers have that feeling again -- that it is OK, that it is working -- they aren't going to buy that product. They aren't going to buy a product that's been joked about, that's been made fun of.
The longer they wait, the tougher it's going to get. It's like an abscessed tooth. If you don't get to the dentist the morning it starts to ache, you wake up in the middle of the night with one bad toothache.
Some people would say there's more wrong with that chip and they don't want to talk about it, that would be the attitude of some people. The only way to defuse that story is to get it all out. The quicker you get it all out, the quicker you get it behind you.
I would not term it one of the worst PR disasters. This is a tough one before a holiday when your product is on the market in someone else's machine. But it's not an airplane crash.
Vlad Friedman,
President,
Atlantic Computer Services
They've admitted the error. They've done what they can.
Suppose all of a sudden 100,000 customers decide it's a problem and they have to have it fixed. . . . That could be a serious hit.
They are a multibillion company but they still don't want to spend millions of dollars if they don't have to. They're a big enough company that they can get away with it."
Glen Ricart,
Director,
Computer Science Center,
University of Maryland
Intel has logically from their point of view downplayed the potential seriousness of the situation and that has caused some of the customers to become uneasy.
This is the airline crash of the computer industry in the sense that we knew that sooner or later there would be a problem, but we kept on using them under the reasoning that most of the time it will operate correctly.
At the moment, there isn't strong competition to [Intel's] 486-Pentium-P6 series of chips. It has established itself as the de facto standard. The world is locked into these chips. There's too much software designed around this chip series that we cannot easily move to a different architecture.