Roll forward a dozen years, and Intel is in a different kind of trouble. It had always been a painful law of the semiconductor industry that innovative and highly profitable new chips quickly became less profitable commodities as soon as competitive parts came on the scene -- largely because there was no brand identification between one semiconductor company's products and another's. Now this cycle was getting shrunk even shorter as Intel chips, by far the dominant processors on the market, were getting attacked on all sides by "clone" chipmakers such as Advanced Micro Devices, which built chips that were as identical to Intel x86s as the law would allow.
Once again, Intel decided to take a big marketing risk, one that, if it had failed, would have chewed up much of the company's profits and compromised its ability to compete in the future. Marketing VP Dennis Carter had noticed an overseas Intel marketing campaign, created by an employee named Bill Howe, that used the catchphrase "Intel In It" over and over like a mantra.
Needless to say, Intel In It morphed into Intel Inside, and the little local ad program became, in the end, a billion-dollar global ad campaign. Intel Corp., an admired but obscure company in the most arcane of industries, had done the impossible: turned itself into a brand name as well known as Coca-Cola. And unlike Coke, Intel did it not with soda pop but with a product that few of people could describe, much less explain.
The success of Intel Inside provoked scores of imitators, all less successful, that changed the landscape of high-tech marketing and branding forever. Of all these, perhaps the most impressive was the branding work done by Applied Materials, a semiconductor equipment company even further up the supply chain than Intel.
Intel Inside had one last lesson to teach high-tech -- the responsibility of raised expectations -- this time with its biggest failure. That came in 1994, with the infamous Pentium bug, a minor software flaw in the mathematical computation function of the Pentium chip. Bugs were common in the chip industry, and as long as you were selling to other technology companies, the usual solution was to simply notify your customers and send out a fix.
But Intel Inside had changed the game. Now the Pentium bug created a kind of mass panic. As newspapers screamed and the company's stock fell, Intel seemed paralyzed with incomprehension. Even Grove prevaricated and, worse, dismissed consumers as hysterical. Then IBM cynically announced it was suspending shipment of all its Pentium-based computers.
The whole mess lasted weeks -- until, in the smartest decision of his career, Andy Grove did an about-face and announced that Intel would replace all buggy Pentiums, and he publicly apologized. In doing so, he saved Intel once again.
The lesson? If you are going to market to consumers you need to understand that you have entered into not only a financial but a social contract with the public. The consumer market can make you very, very rich -- but if you violate that trust, it will take you years, and a fortune, to earn it back.
Intel learned that lesson, as did (with some notable exceptions) the rest of the electronics industry. And we are all better for it.