Intel Knows Best? A Major Marketing Mistake :: essays research papers

INTEL Knows Best? A major(ip) Marketing slipProblem StatementWhen Thomas Nicely, a mathematician at Lynchburg College in Virginia, frontwent public with the fact that Intels new Pentium chip was imperfect Inteladmitted to the fact that it had change millions of risky chips, and had knownabout the defective chips for over four months. Intel verbalize its reasoning fornot going public was that most people would never encounter any problems withthe chip. Intel said that a spreadsheet substance abuser doing random calculations would lone(prenominal) switch a problem every 27,000 years, therefore they saw no reason to replaceall of the defective chips. However if a user possessed a defective chip andcould convince Intel that his or her calculations were curiously vulnerableto the flaw in the defective chip then Intel it would supply those people with anew chip. This attitude of father knows best fostered by Intel created anuproar among users and owners of the defective chips. Si x weeks after Mr.Nicely went public, IBM, a major purchaser of Pentium chips, stop allshipments of computers containing the defective Pentium chips. Intels stockdropped 5% following this bold spark off by IBM. IBMs main contention was that itputs its guests first, and Intel was failing to do this.Intels handling of this defective chip situation gives rise to manyquestions. During the course of this paper I will address several of them. Thefirst of which is how did a company with such(prenominal) a stellar reputation for consumersatisfaction fall into the trap that the customer does not know best? Secondly,what made this chip defect much of a public issue than other defective productsmanufactured and exchange to the public in the past? Finally, how did Intel recoverfrom such a drift? How much did it cost them and what lessons can othercompanies learn from Intels marketing transgress so that they do not make the samemistake?Major FindingsIntel is spearheaded by a chief executive named Andrew Grove. Grove is a"tightly wound engineering Ph.D. who has molded the company in his image. Boththe mysterious of his success and the source of his current dilemma is an anxiousmanagement school of thought built around the motto Only the paranoid survive."However, even with this type of school of thought the resulting dominance he hasachieved in the computer arena cannot be overlooked. Intel oftendominates the computer market with $11.5 billion in sales. Intel has over 70%of the $11 billion microprocessor market, while its Pentium and 486 chipsbasically control the IBM-compatible PC market. All of these factors have