In the Press

Intel Settles Suit by Offering Rebates to Some Customers

July 21, 1997 | New York Times

By John Markoff

The Intel Corporation has settled a class action suit brought in the wake of the disclosure last year that an error in a testing process had led the company to overstate the speed of some of its microprocessor chips by about 10 percent.

Under terms of a preliminary agreement reached earlier this month, the chip maker will offer rebates on the purchase of new processors for some customers and add new language warning computer users to carefully assess comparisons of processor speed.

The plaintiffs in the suit had charged that Intel had cheated on the results of its tests, which rate the chips against a set of industry benchmarks.

”The moral of the story is caveat emptor,” said Linley Gwennap, editor-in-chief of Microprocessor Report, a computer industry newsletter. ”Intel is trying to do a good job with these benchmarks, but in this one case they pushed too hard and then found out later they made a mistake.”

In the settlement, Intel denied that the company ever disseminated any false or misleading information. But the company has agreed to provide a $50 rebate on the purchase of Intel Overdrive processors, which are used for computer upgrades, to customers who purchased a personal computer containing a 120 MHz or a 133 Mhz Pentium processor between Oct. 23, 1995 and Jan. 5, 1996.

The suit was unrelated to the much ballyhooed discovery in 1994 of a math error in the then-new Pentium processor. After initially playing down the significance of that flaw, Intel ultimately made an unconditional offer to replace customers’ chips.

A spokesman for Intel said that the agreement reached this month was preliminary and would be completed in October if there were no appeals. Consumers would then be able to obtain rebates on the purchase of the new Overdrive processors early next year.

”We settled the suit, but we don’t think it made a significant difference,” Chuck Malloy, a spokesman for Intel, said of the error. ”Data wasn’t corrupted; you won’t notice diminished performance.”

It is not certain how many customers will qualify for the rebate offer under the terms of the settlement. Dataquest researchers estimated that fewer than 500,000 of the two processors were sold during the last quarter of 1995.

”Clearly it was a complex case that would have taken a long time,” said Terry Gross, a San Francisco lawyer who represented the plaintiffs, who were customers who had bought personal computers during the time covered by the settlement. ”However, the main import for consumers is to be able to obtain accurate information.”

The agreement specifies that in future advertisements of Intel products referring to industry benchmarks of performance such as SPEC95 and iCOMP, the company will note that the results may not reflect the relative performance of Intel microprocessors in systems with different hardware or software designs or configurations.

The SPEC benchmark series was originally compiled by an industry consortium in an effort to put an end to wildly conflicting performance claims made by different computer companies in the late 1980’s. The measure is administered by the Standard Performance Evaluation Corporation, a nonprofit group that is sponsored by 24 computer makers.

The tests are an effort to put a computer through a series of exercises that closely mirror real-world computing problems. The problem at Intel involved an error in a software program known as a compiler that is used in the tests.

The SPEC benchmarks are generally used by technical and scientific customers in performance evaluations of competing computer systems, rather than by consumers evaluating individual personal computers. For example, a big company or a Government agency might review the SPEC numbers when deciding which work stations to purchase.

As part of the settlement, Intel also agreed to pay the plaintiff’s lawyers $1.5 million, approximately one-half of their fees and expenses.

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