When the Chips Are Down

By Janice Castro

Word of the flaw in Intel's Pentium chip, the powerful new brain in 4 million personal computers sold this year, began circulating before Thanksgiving. But the manufacturing problem was nothing compared with the flaw in Intel's understanding of how to keep good customer relations. Having kept the defect secret for months, Intel blithely dismissed the criticism at first, maintaining that the imperfection in the Pentium would affect only highly complex calculations. Most folks, said Intel, would encounter an inaccurate answer just once in 27,000 years; therefore, the errant chips would be replaced only if computer owners could demonstrate that they really needed an extra margin of accuracy.

Intel had reason to be high-handed: 80% of personal computers used in the world have "Intel inside." But the company didn't count on being blindsided by another behemoth. Last week IBM, the world's largest computer maker and one of Intel's biggest customers, announced that it was halting shipments of all its products containing the Pentium (about half the personal computers it is at present sending out to stores). Brandishing its own laboratory research, IBM contended that the chip's mistakes were far more frequent than Intel had let on. Said G. Richard Thoman, an IBM senior vice president: "We believe no one should have to wonder about the integrity of data calculated on IBM PCs." Some industry observers suggested that IBM may have had ulterior motives for knocking Intel's quality, since Big Blue will begin selling the competing Power PC microprocessor next spring, but the computer maker insisted it was only trying to protect its customers.

Just who needed protection was not clear. The Pentium's imperfection affects division problems involving numbers with many digits. For example, if 4,195,835 is divided by 3,145,727 and then multiplied by 3,145,727, the result should be the original number: 4,195,835. It doesn't even take a computer to figure that out. But machines with the flawed Pentium come up with a different answer: 4,195,579. Although most users might never encounter such a mistake, businesses running thousands of computations a day could possibly run into trouble. The flaw, some experts contend, might affect the accuracy of corporate balance sheets or the calculations that banks make to pay interest to depositors.

While researchers at Intel and IBM debated the seriousness of the problem, customers who had bought -- or planned to buy -- Pentium-based computers were confused and often angry. Intel admitted last week that tens of thousands of customers have called about the problem. Easing its earlier hard line, the company agreed to replace a few thousand of the chips for buyers who requested a switch, and it will soon begin selling a corrected model. But to Robert Sombric, the data-processing manager for the Portsmouth, New Hampshire, government, Intel's decision to go on selling the flawed chips for months was inexcusable. Said he: "I treat the city's money just as if it were my own. And I'm telling you: I wouldn't buy one of these things right now, until we really know the truth about it." Repairing Pentium's flaw may be much easier than fixing the damage done to Intel's image.

With reporting by David S. Jackson/San Francisco and Jane Van Tassel/New York