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The Big Cost of Software Bugs

By Jordan Robertson, Marcus Chan and Mark Milian - 2012-08-03T19:53:28Z

Photograph by Ed Kashi/Corbis

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Intel's Miscalculation

When a math professor discovered and publicized a flaw in Intel Corp.'s popular Pentium processor in 1994, the company's response was to replace chips upon request to users who could prove they were affected. The calculating error caused by the flaw would happen so rarely that the vast majority of users wouldn't notice, the company claimed.

Angry customers demanded a replacement for anyone who asked, a request that Intel agreed to. The episode cost Intel $475 million -- and taught the company's top executives a lesson about the growing indispensability of the PC to ordinary people.

"We received a crash course in consumer relations," the executives wrote in the company's 1994 annual report. "In the future, we intend to be better prepared to meet the public expectations that come with our dramatically higher profile."

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