Dell to sell computers through Wal-Mart

San Francisco/Boston: Dell Inc said on Thursday it plans to start selling personal computers through Wal-Mart Stores Inc in North America next month, breaking from a 23-year model of direct sales as it tries to rekindle business.

Dell, which called the move a "first step" into the retail market, will start selling the computers bundled with accessories for under $700 starting June 10. Shares of Dell slipped along with computer component makers amid investor concern the low-priced PCs may squeeze profit margins.

Dell computers will be available in about 3,500 Wal-Mart and Sam's Club stores in the United States, Canada and Puerto Rico, a spokesman said. Dell and Wal-Mart declined to provide details on how the packages will be equipped.

The world's largest retailer will sell two models of Dell's Dimension multimedia desktop computer, which are now available directly from the computer maker.

"They [Dell] need to go retail and they are finally doing it," said Shaw Wu, an analyst with American Technology Research who has a "neutral" rating on Dell shares and does not own any.

Dell is expanding in retail stores to compete better with Hewlett-Packard Co, which has overtaken Dell as the world's No 1 PC maker, partly through a strategy of selling in the United States through major retailers such as Wal-Mart, Circuit City Stores Inc. and Best Buy Co Inc.

Shares down

Dell shares closed down 37 cents, or 1.4 per cent, at $25.89 after earlier gaining as much as 1.7 per cent.

The combination of Wal-Mart, famous for low prices, and Dell's Dimension desktops, the company's lowest-priced consumer models, may deter some upscale buyers, said JP Gownder, an industry analyst at market researcher Forrester Research Inc.

"This is a first foray into the world of retail" for Dell, Gownder said. "It's not a bad move. But in the long run, they'll want to establish a more-sophisticated retail strategy."