THE RECALL of Intel's Cougar Point chip is an embarrassment for the firm, but Intel has managed to play the damage limitation game better than its rivals.
Initiating the recall of a product, especially a headline product is never going to bathe a company in a flattering light, however Intel's decision to stand up and publicly declare that its Cougar Point chip has a fault has limited the damage to its reputation. The short term financial cost to the firm might be in the region of $700 million, but the way it chose to publicly address this issue could well have saved it that much or more in future business.
Intel's H67 and P67 chipsets were found to show SATA II performance degradation. In stress tests, Intel's claims a six percent drop over the course of three years. That was enough for the firm to institute a full scale shutdown of Cougar Point chip production and initiate a recall of the chips. It is expected that the production shutdown will result in a two month delay in Cougar Point chips reappearing on the shelves in products.
Following Intel's disclosure, several system builders and motherboard manufacturers have issued product recalls. The cost of this recall won't be felt by Intel immediately but it's a strategy that saves the firm money in the long run, along with its reputation and its relationship with its partners.
In the past The INQUIRER reported extensively on how another chip shop, Nvidia, took all the wrong steps in trying to deal with major problems in some of its GPUs, which became known as bumpgate. While Intel is no corporate saint, no one can claim it has tried to dodge the issue. Parallels to the infamous 1994 Pentium FDIV bug have been made, but in reality there is a night and day difference between the two events.
Back in 1994, Intel faced criticism for its poor handling of the matter, eventually being forced into initiating a recall of Pentium chips. One 25 year Intel veteran told The INQUIRER that after that incident, Gordon Moore, Intel's then chairman, took a deep personal interest in finding out how such an embarrassing error occurred, initiating a number of internal reviews. Moore's investigation might not have stopped Intel from making mistakes, but the Pentium FDIV bug proved to be a watershed for the firm. It led Intel to take a more proactive stance on recalls such as the overheating Pentium III 1.12GHz chip.
The truth is processors, whether they are made by Intel, AMD or anyone else, have minor design flaws that are detailed as errata. A few years back Intel's Core 2 architecture was dragged through the mud after Intel made amendments to the errata for a number of Core 2 chips.
The point of publishing errata is to allow developers to bypass potential problems in the hardware through software, and while it might seem something like the 'force-majeure' clauses found in insurance contracts, chip designers and manufacturers say it helps them keep costs and ultimately prices at reasonable levels. However there are certain faults, such as performance degradation, that cannot be solved by any level of coding trickery, leaving Intel footing the best part of a billion dollar bill.
By coming forward and declaring its Cougar Point chip has a problem, Intel can expect that its partners will look upon the firm as a reputable business partner. Intel is insulated from end-users by original equipment manufacturers such as HP and Samsung and the retail channel. Those firms who have to deal with thousands of customers, explaining to them that their brand new machines need to be returned for an apparently invisible fault.
So Intel's admission serves as a good reference point for these firms when explaining to customers that it was a problem with Intel's products, not theirs, that resulted in the recall.
While Intel patches up relations with its customers, the question is whether this latest debacle has left you, the person who parts with your hard earned cash, thinking of swapping to competitor products? Has Intel's humility done enough to preserve your confidence in the firm, or will its latest quality control snafu push you to buy AMD? µ
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