Dell Moves Beyond Direct Sales With Wal-Mart Deal

Dell will begin selling two models of its desktop PCs at Wal-Mart stores on June 10, fulfilling a series of recent hints from CEO Michael Dell that the company would move beyond the direct-sales model that once made it the world's largest PC vendor.

Wal-Mart will sell the desktops for less than US$700 each in its thousands of stores located in the United States and Puerto Rico, according to a Wal-Mart statement issued Thursday. The store also said it expects to offer additional Dell PC models in its Sam's Club and Wal-Mart Canada stores, but did not provide model names or dates.

The Dimension Multimedia Desktop is the first model to reach Wal-Mart shelves, chosen as a good match for shoppers' demands for value pricing and proven technology, according to a statement by Gary Severson, Wal-Mart's senior vice president for entertainment and electronics.

Wal-Mart already sells desktop PCs from Hewlett-Packard (HP), Acer and Gateway, as well as notebooks from HP, Acer, Lenovo, Toshiba, Sony, Asus and several smaller vendors. The store also sells monitors, PDAs and peripherals.

The strategy marks a major change in how Dell sells computers. Until now, the company has taken orders over the phone or via its website, allowed customers to choose their own specifications and then assembled a custom-built PC for each user. That approach allowed Dell to cut its storage and logistic costs far below its competitors, undercut their prices and win new market share.

But the direct-sales business model is no longer such an advantage, since competing PC vendors say they have learned their lesson and trimmed their own costs. And critics note that buyers in developing countries don't trust their postal systems enough to purchase expensive PCs through the mail.

"Customers want more and new ways to buy our products and we plan on meeting their needs on a global level. Offering Dell Dimensions in Wal-Mart is a great example of this approach," said Dell spokesman Dwayne Cox in an e-mailed statement.

"While we can't get into specifics, in the coming quarters there will be additional activity in support of this move into global retail. Today's announcement with Wal-Mart represents our first step. Stay tuned," he added.

Dell fell behind rival HP in 2006 in PC sales, and has struggled with a series of poor earnings reports and lawsuits. In an attempt to reverse those results, Michael Dell returned to his job as CEO in January, and immediately wrote a series of corporate memos pledging broad changes in the company. Now he has acted on those words.

This story, "Dell Moves Beyond Direct Sales With Wal-Mart Deal" was originally published by IDG News Service Boston Bureau .

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