Intel, which makes components used in \(80 \%\) of all personal computers, introduced the powerful Pentium chip in 1993. Intel had spent \$1 billion developing the chip, and the cost of producing it was estimated to be between \(\$ 50\) and \(\$ 150\) each. When the Pentium chip was finally rolled out, Intel shipped 4 million of the chips to computer manufacturers, including IBM. In July 1994, Intel discovered a flaw in the "floating-point unit" of the chip, which is the section that completes complex calculations quickly. Grove responded that Intel's delay in offering replacements was based on concerns about precedent. "If we live by an uncompromising standard that demands perfection, it will be bad for everybody," he said. \({ }^{91} \mathrm{He}\) also acknowledged that Intel had agreed to sell the flawed Pentium chips to a jewelry manufacturer. \({ }^{92}\) By December 16,1994, 10 lawsuits in three states involving 18 law firms had been filed against Intel for the faulty chips. Chip replacement demands by customers, however, were minimal. Intel's internal employee newsletter had an April 1, 1995, edition that spoofed the infamous chip. \({ }^{93}\) A spoof form provided in the newsletter required customers with Pentium chips to submit a 5,000-word essay on "Why My Pentium Should Be Replaced." In 1997, Intel launched two new products: Pentium Pro and Pentium II. A new potential bug, again affecting only intensive engineering and scientific mathematical operations, was uncovered. Intel, however, published the list of bugs, with technical information and remedies for both of the new processors. One analyst commented on the new approach, "They have learned a lot since then. You can't approach the consumer market with an engineering mindset...............

\section*{Discussion Questions}
1. Should Intel have disclosed the flaw in the Pentium chip when it first discovered it in July 1994 ?
2. Should Intel have issued an immediate recall? Why do you think the company didn't do that? Discuss what issues their executives missed by applying the models you learned in Unit 1.
3. Was it ethical to offer limited replacement of the chip?
4. A joke about Intel's Pentium chip (source unknown) circulated on the Internet: Top Ten Reasons to Buy a Pentium-Equipped Computer:
(10) Your current computer is too accurate.
(9) You want to get into the Guinness Book of World Records as "owner of most expensive paperweight."
(8) Math errors add zest to life.
(7) You need an alibi for the IRS (6) You want to see what all the fuss is about.
(5) You've always wondered what it would be like to be a plaintiff (4) The "Intel Inside" logo matches your decor perfectly.
(3) You no longer have to worry about CPU overheating.
(2) You got a great deal from the Jet Propulsion Laboratory.
(1) And the number one reason to buy a Pentiumequipped computer: It'll probably work. \({ }^{95}\)
Based on this circulating joke, discuss the long-term impact on Intel of this chip and Intel's decisions on how to handle it.
5. Assume that you are an Intel manager invited to the 1994 post-Thanksgiving meeting on how to respond to the public revelation of the flawed chips. You believe the failure to offer replacements will damage the company over the long term. Further, you feel strongly that providing a replacement is a bal. anced and ethical thing to do. However, CEO Grove disagrees. How would you persuade him to offer replacements to all purchasers?
6. If you could not persuade Grove to replace the chips, would you stay at the company?