Dell announced today that it will begin selling a Dimension desktop PC through Wal-Mart and Sam's Club locations throughout the U.S. and Canada.

It's hardly a major rollout; only the Dimension E521 will be sold beginning June 10 at 3,400 Wal-Mart stores in the U.S. and Puerto Rico. Customers will have a choice of a 19-inch monitor or just the PC, which retails for $359 on Dell's direct-sales site. It's a fairly low-end product with an AMD Sempron processor and light on memory, storage and graphics performance compared to other Dell products.

Pricing will be determined by Wal-Mart, the world's largest retailer, at a later date.

Earlier this month, Wal-Mart announced plans to remodel and expand its consumer electronics section. Dell is one of the new companies added to that newly expanded section.

"Dell is a proven electronics brand and adds a new complement to our other high-quality desktop selections, and we're very excited to now bring our customers new access to a product they want, with the ability to purchase a Dell right away," said Gary Severson, senior vice president of home entertainment at Wal-Mart, in a statement.

"I think investors should look at the broader picture and what it implies for the future," said Brian Sozzi, retail analyst for Wall Street Strategies. "Right off the bat one must hypothesize Dell is going to be more aggressive in rolling out more models in the near future to more stores. If this works out according to plan, Dell's earnings power changes rather significantly. Essentially, they are entering a market they were never in before."

But Stephen Baker, vice president of industry analysis for NPD Techworld, warns it's only a first step. "It's a great way for Dell to dip its toes into the retail waters, but this probably isn't the way for them to go into retail," he told internetnews.com. "Wal-Mart doesn't offer them all the things they need from a retail partnership if that's what they choose to do," he said, referring to the level of support that customers might want for these computers.

Baker said this will help Dell try and understand what all the challenges are of selling to a retail store, unfamiliar territory for the direct seller.

"I would say the first thing they are going to have to get used to is they don't own this customer and they don't own the product once it gets to Wal-Mart. Dell won't have a direct relationship with those customers who bought through Wal-Mart, and that's a very big cultural change for Dell," he said.

Because customers tend to build a relationship with the merchant and not the maker, Dell customers who buy from Wal-Mart may relate to the store, rather than Dell itself, said Baker.

But Bob Pearson, a spokesman for Dell, said nothing will change with the direct model, and the company hopes to form similar relations with its Wal-Mart customers.

"Quite a few people are online but not everyone is. So I think it will broaden our reach," he said. "So if you think about it, it makes sense for us to help that market that's coming online get online faster with Dell."

Dell is still investing in the direct model and believes in it "as much as we ever have," said Pearson. He declined to discuss adding more models to the Wal-Mart selection or discuss any other retailers. "There's a whole lot more to come but let us get this started before adding more," he said.

Dell also made good on another promise, making available computers pre-loaded with Linux. Users will get a bit more choice here, with three computers -- the XPS 410n, Dimension E520n desktop and the Inspiron E1505n notebook -- all pre-loaded with Ubuntu 7.04 Linux.

The Linux PCs will be priced from $599 to $849 and are available for order from Dell now, unlike the Wal-Mart PCs.


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