The Role of the Internet

Abstract

Intel is the world’s leading chip maker. Its microprocessors are the brains of roughly 80 percent of the world’s 150 million PCs, and the company’s 56% gross profit margin topped the industry. The company sells most of its chips to a handful of large computer manufacturers — Compaq, Packard-Bell, Gateway 2000 and IBM — who then sell Intel-based PCs under their own brand names. Intel’s new, state-of-the-art Pentium chip was selling briskly during 1994, accounting for nearly a quarter of the company’s unit shipments. Positioning the chip as suitable for both home and heavy-duty workstation use, Intel coupled the Pentium’s release with its $150-million ‘Intel Inside’ advertising campaign designed to heighten consumer awareness of the role of its microprocessor.

The Internet is an increasingly potent force in crises and issues. It cannot be ignored — and the Intel Pentium crisis in 1994 fired a large warning shot across the bows of all companies and organisations.

This chapter is extracted from a case study that first appeared in Business Ethics magazine, published by Blackwell Business, in January 1997. Although primarily about the Pentium crisis it contains a wealth of valuable observations and advice about the role of the Internet in a crisis. The authors are: Joseph L. Badaracco, Jr, who is John Shad Professor of Business Ethics at the Harvard Business School, and Jerry V. Useem, who is a former Research Associate at Harvard and currently on the editorial staff of Inc. magazine.