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Sunday, April 22, 2007

Internet and new technology failures: Intel’s Pentium chip

Problem? What problem?

In 1997, a professor of mathematics found a glitch in Intel’s Pentium chip. He discovered that the mathematical functions for the chip’s complicated formula were not consistently accurate. The professor decided to send an article about his findings to a small academic newsgroup. Word spread through the university community and the editor of a trade title caught hold of the story. The general press then reported the professor’s findings and sought Intel’s response. Intel denied any major problem, declaring it would only affect a ‘tiny percentage’ of customers. They failed to take responsibility or replace the affected chips.

The issue grew online, as it became a key topic in an increasing number of online discussion groups, which kept on feeding the offline media. Intel’s share value dropped by over 20 points. It was only when IBM’s declaration that it would not use Intel chips in its computers made the front page of the New York Times that Intel went back on its previous position and agreed to replace the chips. Even today, evidence can be found of how Intel’s poor response to online criticism has affected its reputation on the Net. The ‘Intel Secrets’ site at, which was set up at the time of the media’s damning coverage of Intel’s unhealthy chip, still emphasizes the faults to be found in various Intel products.

Lessons from Intel’s Pentium chip

  • Remember that bad news makes the front page – whereas good news is relegated to page 17 of the Sunday supplement; it’s as simple as that. As Lord Northcliffe, the founder of the Daily Mail, once said: ‘News is what somebody somewhere wants to suppress; all the rest is advertising.’
  • Don’t ignore online criticism. Alongside Intel, McDonald’s, Shell, Apple,Netscape and, most frequently, Microsoft, have suffered as a result of letting negative issues develop online until the offline media pick them up and transform them into a crisis.
  • Respond quickly. While the Internet may give people who have a grudge against your firm an attentive audience of similarly aggrieved individuals, it also gives businesses the opportunity to respond quickly and effectively to the spread of misinformation.
  • Monitor your critics. Trouble builds-up slowly over time and, in all but the rarest cases, it is only poor management that transforms an ‘issue’ into a ‘crisis’. Although cyberspace gives your e-critics a voice they may not have elsewhere, it also allows you to predict, locate and respond to negative publicity.

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