Author's note: First written for the online magazine Net.Value, this history of Intel's Pentium "bug" crisis has been reprinted, quoted, and used as a tool for teaching marketing classes. It became, much to my surprise, the most popular article I've ever written. Although the crisis happened eighteen years ago, the lessons lessons it teaches still matter to marketers today.
The pandemonium over Intel's Pentium chip cost the company millions of dollars and could easily have been prevented. The uproar started and grew on the Internet. A close look at this case demonstrates several important points about publicity on the Internet.
June 1994: Intel testers discover a division error in the Pentium chip. Intel managers decide that the error will not affect many people and do not inform anyone outside the company. This was Intel's first mistake. The company was right in that the division error could affect only a few customers, but not disclosing the information made Intel appear to hide a sinister secret. It sent the message to customers that Intel was not trustworthy. Disclosing the flaw upon discovery would have created only minor news, on the same low level as an automaker announcing a minor defect. (Today Intel posts all known flaws on the Internet to avoid a reccurrance of this problem.) The same month, Dr. Thomas R. Nicely, a professor of mathematics at Lynchburg College, Virginia, notices a small difference in two sets of numbers. He double-checks all his work by computing everything twice, in two different ways. Dr. Nicely spends months successively eliminating possible causes such as PCI bus errors and compiler artifacts.
Wednesday, October 19: After testing on several 486 and Pentium-based computers, Dr. Nicely is certain that the error is caused by the Pentium processor.
Monday, October 24: Dr. Nicely contacts Intel technical support. Intel's contact person duplicates the error and confirms it, but says that it was not reported before.
Sunday, October 30: After receiving no more information from Intel, Dr. Nicely sends an email message to a few people, announcing his discovery of a "bug" in Pentium processors. (Dr. Nicely's original email message)
The speed at which events develop from that email message graphically illustrates the nature of public relations on the Internet. This is how PR works today. Businesses of all kinds, take note.
That same day, Andrew Schulman, author of Unauthorized Windows 95, receives Dr. Nicely's email.
Tuesday, November 1: Schulman forwards Dr. Nicely's message to Richard Smith, president of Phar Lap Software in Cambridge, MA. Phar Lap's customers write number-crunching software that could be affected by the Pentium flaw. Phar Lap programmers test and confirm the division error. Realizing the significance of the flaw, Smith immediately forwards Dr. Nicely's message to important Phar Lap customers, to Intel, and to people at compiler companies, including Microsoft, Borland, Metaware and Watcom. He also posts the message to the Canopus forum of CompuServe with a note asking people to run Dr. Nicely's test and report results back to Smith. This is the first public disclosure of the flaw.
Wednesday, November 2: Smith receives about ten confirmations of the error from Canopus readers. Alex Wolfe, a reporter for Electronic Engineering Times, sees Smith's post on Canopus and starts research for a story. He forwards Dr. Nicely's message to several people, including Terje Mathisen of Norsk Hydro in Norway.
Thursday, November 3: Mathisen confirms the flaw and emails his findings back to reporter Wolfe. Mathisen goes to the Internet newsgroup comp.sys.intel and posts a message titled "Glaring FDIV Bug in Pentium!" Within 24 hours, hundreds of technical people all over the world know about the Pentium flaw. (Note that only two days have passed since Schulman forwarded Dr. Nicely's original message.) All hell breaks loose on the newsgroup.
Monday, November 7: Wolfe's article runs in Electronic Engineering Times, headlined INTEL FIXES A PENTIUM FPU GLITCH. In the story, Intel says it has corrected the glitch in subsequent runs of the chip, and Steve Smith of Intel dismisses the importance of the flaw, saying, "This doesn't even qualify as an errata (sic)." This is only the first print article about the flaw, but by this time there are hundreds of postings about it in CompuServe forums and Internet newsgroups. All research results are posted in public on the Net for the world to criticize and contribute to.
Wednesday, November 9: The ruckus spills out of the technical newsgroups and into business and investment newsgroups.
Tuesday, November 15: Tim Coe of Vitesse Semiconductors and Mike Carleton of USC announce on the Net that they have reverse-engineered the way the Pentium chip handles division and created a model that predicts when the chip is wrong. By this time, a furor has erupted on the Net. Intel still claims there is no problem. Intel's stock drops 1 3/8 points.
Tuesday, November 22: CNN's Moneyline program looks at the issue. Steve Smith of Intel says the Pentium processor's problem is minor.
Wednesday, November 23: MathWorks sends out what is a press release on the issue, MATHWORKS DEVELOPS FIX FOR THE INTEL PENTIUM FLOATING POINT PROCESSOR.
Thursday, November 24 (Thanksgiving holiday): The New York Times runs a story by John Markoff, CIRCUIT FLAW CAUSES PENTIUM CHIP TO MISCALCULATE, INTEL ADMITS. In the story, an Intel spokesman says the company is still sending out the flawed chips. A similar story by the Associated Press is printed by more than 200 newspapers and run on radio and television news. Intel Applications Support Manager Ken Hendren posts a message on America Online and the Internet, revealing that Intel has no one providing customer support on the Internet. Intel seems unaware of the solidity of opinion on the Net about the Pentium processor's flaw. At this point, an offer by Intel to replace any flawed Pentium chips would have smoothed the waters. Instead, Intel makes an offer to replace a Pentium chip only after Intel had determined you used the chip in an application in which it would cause a problem. Intel customers are irate. The chip hits the fan.
Friday, November 25: This weekend, the Internet's humor newsgroups sprout Pentium jokes.
Sunday, November 27: A notice appears on the Internet newsgroup comp.sys.intel, from Intel's president, Dr. Andrew Grove, but bearing someone else's "return address". (Dr. Grove's original posting)
This posting has two problems.
1. Since Grove's message was not posted from his own address, many readers assumed that it was a spoof--a forged message--and had been written by someone other than Grove.
2. It should not have been released on the Internet first. There are some things you should not use the Internet to do. Put out standard press releases, yes. Distribute new product announcements, sure. But if your company lands in a jam in the New York Times, an email message is too commonplace, too everyday and too trivial. There are times when a simple solution is best and times when only a bigger and more traditional approach will work. Intel tried to stop a rampaging rhino with a flyswatter. It should have called a press conference. Grove's email only fueled the flames.
Monday, November 28: Internet newsgroups are flooded with furious messages such as, "Having conclusively demonstrated themselves utterly unworthy of the public's trust, they still seem unable to comprehend what that means." No one from Intel responds to these posts.
November 29 - December 11: Intel receives thousands of messages and phone calls saying that Intel misses the point. Intel becomes a laughingstock on the Internet joke circuit:
Monday, December 12: IBM issues a press release: IBM HALTS SHIPMENTS OF PENTIUM-BASED PCS. Intel counters with INTEL SAYS IBM SHIPMENT HALT IS UNWARRANTED. Internet analysts immediately demonstrate that IBM's claims are exaggerated, but at the same time no one believes Intel.
Wednesday, December 14: Intel releases a white paper explaining the situation rationally. Too late. Intel's communications are jammed with tens of thousands of phone calls and email messages from worried and angry customers.
Friday, December 16: Intel stock closes at $59.50, down $3.25 for the week.
Monday December 19: The New York Times prints a story by Laurie Flynn headlined INTEL FACING A GENERAL FEAR OF ITS PENTIUM CHIP. It says that eight product liability lawsuites and two shareholder suits were filed against Intel. Flynn quotes Florida Deputy Attorney General Pete Antonacci: "They've got to stop acting like a rinky-dink two- person operation in a garage and start acting like the major corporation they are." About the same time, a New York Times story about the New Jersey Nets basketball team is headlined MENTALLY SPEAKING, NETS ARE PENTIUMS. Intel's lavishly promoted brand name has become an insult.
Tuesday, December 20: Intel finally apologizes and says it will replace all flawed Pentiums upon request. It sets aside a reserve of $420 million to cover costs. It hires hundreds of customer service employees to deal with customer requests. And it dedicates four fulltime employees to read Internet newsgroups and respond immediately to any postings about Intel or its products.
January, 1995: Intel has received commitments to purchase all the Pentium chips it can manufacture through the end of 1995.
From this story, what lessons can we learn about public relations on the Internet? The first thing is to respond to emailed complaints as quickly as possible. Unless your company has people monitoring newsgroups, an incoming email message may be your first sign of a serious disturbance. When you receive an emailed complaint, ask yourself what would happen if hundreds of other people spread that complaint across the Net, as happened with Dr. Nicely's original message. Speed is extremely important in responding to any Internet crisis.
Another obvious conclusion is that when you see hundreds of email messages and newsgroup postings which all say you have a problem, and you don't think you have a problem, think twice: you really do have a problem. You might not have a technical problem, but you have a PR problem. Intel said, "Pentium chips have a flaw, but it doesn't matter." Intel's customers said, "It does too matter." Intel responded "No, it doesn't," and even though Intel meant well, thousands of its customers on the Internet swore they saw Intel stick its virtual tongue out at them. In retrospect, it seems like a no-brainer, but Intel had the facts on its side and thought that the facts mattered. They didn't. When you are absolutely sure you are right, you increase your likelihood of making a mistake. Ask any prosecuting attorney. The facts have very little to do with the outcome of a case--it's how the facts are couched and presented that sways your jury.
Unlike traditional news media, the Internet has no filtering process. Messages come quickly and from many sources. It is impossible for your media relations people to put a spin on Internet postings. That is why it is important for you to monitor what is being posted on the Net, and why you need to post proactive information. If Intel would have posted information about the Pentium flaw in June, it would have prevented almost everything that happened afterwards.
Another result of the lack of filters on the Internet is that newsgroups can exaggerate. If someone posts exaggerated or angry newsgroup messages or sends flaming email about your business, you can employ the procedures Intel now uses. It has determined that even a large feeding frenzy is usually fueled by five or six instigators, or fewer. They are the people who are the most emotionally upset, who post most often, and who copy other people's messages to multiple newsgroups to "spread the word" of their point of view. First, you must identify these instigators. This is the vital thing. Who are the people who have a vendetta? Who are the people who feed the flow? Send email to each person directly. Be conciliatory. Politely say that you think the person has legitimate concerns. You realize that this is a serious matter. Give the person your direct phone number and ask them to please call at his or her earliest convenience so you can clear this up immediately. The phone call is the key. When you get the person on the phone, he or she will be contrite. This is just human nature. It's easy to flame an intangible name or company you don't know. Once you make human contact, however, it's easier to conduct a give-and-take discussion. Intel has used this tactic with repeated success. A discussion with someone from Intel once convinced a total flamer to ameliorate his previous newsgroup postings.
If there is a continuing situation regarding your company, and that situation is discussed repeatedly on the Net, don't post one message and then go away for a week. Someone from your company will need to provide a continuing voice in the discussion, even if to just repeat your side of a story. The balance of postings in the Pentium story was easily more than a hundred postings by the public to every one posting by Intel.
Remember that anything on the Net can be picked up by traditional media. Had it not been for the fact that reporters now use the Internet as a news source, the minor flaw in Intel's chip would not have blown up in the media, which fostered the feeding frenzy. All the newsgroup postings in the world do not have the impact of a story in the New York Times.
And don't try to do all your public relations on the Net. Use the Internet as one ingredient in your mix, but not for everything. Some things--as Andy Grove's Internet message demonstrated--will have better results when done off the Net.