NEC warned of 'killer bug'

The disclosures could become an important element in an escalating legal battle over PCs with allegedly defective floppy drives sold since then. Toshiba Corp. last week agreed to a $2.1 billion settlement in a class-action lawsuit over notebook computers with floppy drives that allegedly contained a flaw that could surreptitiously destroy user data. The same Texas plaintiffs' lawyers have since filed suit against four other PC makers whose machines, they claim, evidence the same problem.

NEC, of Japan, had been named a defendant in the Toshiba case but was dropped as part of the settlement. As part of document discovery in that suit, the Japanese chip maker's U.S. unit turned over a copy of an advertisement and other marketing materials it prepared in 1990 highlighting its concern about the defect. The material contains the strongest language yet from a major industry player acknowledging the seriousness of the defect. It suggests how worried NEC officials were at the time about the potential impact on average computer users.

An NEC spokesman in the company's U.S. microchip unit confirmed the advertisements, complete with an illustration and offer of a free "data corruption detector," ran for nearly a year through 1991 in various electronics-industry trade publications primarily aimed at engineers. The copy in the ad referred to the problem as a "multitasking murder mystery," since it occurred mainly on PCs that run more than one program at a time, and referred to "dastardly deeds" resulting from the data-corruption bug.

"Often skulking unnoticed" by the user, the defect could become a "data-eater" and is "especially dangerous" when a computer is running a number of programs at the same time, the advertisement states.

Took pains to tell customers
The NEC spokesman said the company took pains to tell its customers about the flawed disk controller and its potential consequences. Initially informed about the problem in 1986 by customers International Business Machines Corp. and Hitachi Ltd., NEC produced several technical analyses of the bug and later developed a successor chip that was free of the problem.

NEC said it contacted all of its customers about the potential problem in October 1987. What remains unclear, however, is exactly how the original flaw from its early disk controller appears to have spread throughout the PC industry.

The NEC documents illustrate "the nature and the seriousness of the 1987 computer-chip defect," according to Lon Packard, a Salt Lake City lawyer who has helped expose the problem. "Unfortunately, 12 years later the same data-corrupting defect is in millions of chips and computers," he said.

Some of the PC makers now facing the lawsuits -- a group that includes Compaq Computer Corp. (NYSE:CPQ), of Houston, Hewlett-Packard Co. (NYSE:HWP), of Palo Alto, Calif., eMachines Inc. and Packard Bell NEC Inc., a unit of NEC in Sacramento, Calif. -- say they remain baffled by the suits. EMachines, of Irvine, Calif., says it still hasn't even seen a copy of the complaint. Nevertheless, a company spokeswoman said eMachines believes it shouldn't be part of the suit because the company believes the disk-controller problem is related to notebook floppy-disk drives and eMachines doesn't make notebook computers.

Some outside lawyers, too, argued the lawsuits appear to be designed more to pressure PC makers to settle than to argue a case for trial. The nearly identical complaints filed against the four PC makers, for instance, don't include mention of part numbers or any other information that would identify specific, allegedly faulty disk-controller components. Neither do they describe any specific damage caused by the alleged flaw. NEC Corp. launched a public campaign in 1990 warning of what it called a "killer bug" hidden in the floppy-disk drives of many personal computers, one it said could surreptitiously corrupt data and cause "catastrophic system failure."

The disclosures could become an important element in an escalating legal battle over PCs with allegedly defective floppy drives sold since then. Toshiba Corp. last week agreed to a $2.1 billion settlement in a class-action lawsuit over notebook computers with floppy drives that allegedly contained a flaw that could surreptitiously destroy user data. The same Texas plaintiffs' lawyers have since filed suit against four other PC makers whose machines, they claim, evidence the same problem.

NEC, of Japan, had been named a defendant in the Toshiba case but was dropped as part of the settlement. As part of document discovery in that suit, the Japanese chip maker's U.S. unit turned over a copy of an advertisement and other marketing materials it prepared in 1990 highlighting its concern about the defect. The material contains the strongest language yet from a major industry player acknowledging the seriousness of the defect. It suggests how worried NEC officials were at the time about the potential impact on average computer users.

An NEC spokesman in the company's U.S. microchip unit confirmed the advertisements, complete with an illustration and offer of a free "data corruption detector," ran for nearly a year through 1991 in various electronics-industry trade publications primarily aimed at engineers. The copy in the ad referred to the problem as a "multitasking murder mystery," since it occurred mainly on PCs that run more than one program at a time, and referred to "dastardly deeds" resulting from the data-corruption bug.

"Often skulking unnoticed" by the user, the defect could become a "data-eater" and is "especially dangerous" when a computer is running a number of programs at the same time, the advertisement states.

Took pains to tell customers
The NEC spokesman said the company took pains to tell its customers about the flawed disk controller and its potential consequences. Initially informed about the problem in 1986 by customers International Business Machines Corp. and Hitachi Ltd., NEC produced several technical analyses of the bug and later developed a successor chip that was free of the problem.

NEC said it contacted all of its customers about the potential problem in October 1987. What remains unclear, however, is exactly how the original flaw from its early disk controller appears to have spread throughout the PC industry.

The NEC documents illustrate "the nature and the seriousness of the 1987 computer-chip defect," according to Lon Packard, a Salt Lake City lawyer who has helped expose the problem. "Unfortunately, 12 years later the same data-corrupting defect is in millions of chips and computers," he said.

Some of the PC makers now facing the lawsuits -- a group that includes Compaq Computer Corp. (NYSE:CPQ), of Houston, Hewlett-Packard Co. (NYSE:HWP), of Palo Alto, Calif., eMachines Inc. and Packard Bell NEC Inc., a unit of NEC in Sacramento, Calif. -- say they remain baffled by the suits. EMachines, of Irvine, Calif., says it still hasn't even seen a copy of the complaint. Nevertheless, a company spokeswoman said eMachines believes it shouldn't be part of the suit because the company believes the disk-controller problem is related to notebook floppy-disk drives and eMachines doesn't make notebook computers.

Some outside lawyers, too, argued the lawsuits appear to be designed more to pressure PC makers to settle than to argue a case for trial. The nearly identical complaints filed against the four PC makers, for instance, don't include mention of part numbers or any other information that would identify specific, allegedly faulty disk-controller components. Neither do they describe any specific damage caused by the alleged flaw.