Intel Corporation. You may recall that this crisis was based around the Pentium chip error. A math Professor at Lynchburg College (Virginia) noticed that his Pentium-based computer was making mistakes. The professor contacted Intel. Intel pleaded ignorance. A free replacement was out of the question unless people could prove to Intel they were affected by the flaw. The professor sent an e-mail to colleagues, pointing out the flaw. It ended up on the Internet. Intel says the typical user wouldencounter a wrong answer once every 27,000 years.

After a story about the flaw appeared in Electronic Engineering Times, the Pentium chip flaw became a significant issue. Intel's image was under attack: "Intel is being painted as the Exxon of the chip industry. Eventually, Exxon cleaned up the Valdez mess, but it never cleaned up its image," according to Dan Hutchinson, president of VLSI Research, in San Jose, California.

Seven weeks after the crisis erupted, Intel announced a new policy to avoid long-term damage to its reputation.

First, Intel ran ads in major newspapers saying it wants to "sincerely apologize. To some users, the old policy seemed arrogant and uncaring. We were motivated by a feeling that this (replacement of the chip) was not necessary for most people. We still believe that, but want to stand behind our product," according to CEO Andrew Grove.

Second, Intel agreed to send a new chip within 60 days,

Third, Intel agreed to help the people install the chip themselves or pay to have someone do it for them.

(Underestimated) "Intel's stubbornness turned what could have been a minor problem, perhaps limited to a few scientists and engineers, into a costly fiasco," according to Richard Zwetchkenbaum, analyst at IDC in Framingham, Massachusetts.

Intel discovered the flaw last July, but kept quiet about it. If it had revealed it then and offered to replace chips for free, only a few users probably would have responded.

Questions

1. Suggest the title for the case.

2. What was the main crisis in this case?

3. What steps Intel company took to manage their reputation?

4. What pre -crisis step they would have taken to prevent huge loss?