Dell's (NASDAQ:DELL) thin consumer-direct model is starting to widen at the waist. The company is moving into retail distribution in a major way, setting up shop at the world's largest retail chain.
Selling Dell desktops through roughly 3,500 Wal-Mart (NYSE:WMT) locations starting June 10 will be a humbling departure for the company. In its prime, envious companies would head to the Dell campus to learn more about the operating efficiency behind Dell's thin distribution model. Retail was seen as clunky as Hewlett-Packard (NYSE:HPQ) struggled to absorb Compaq and Gateway (NYSE:GTW) was shuttering its namesake retail outlets.
Times change. So will Dell.
The move won't solve all of Dell's recent problems. Despite the colorful Dell televised campaigns over the years, this is still a company that relies on corporate orders. Consumer-based moves into things like MP3 players and consumer electronics haven't exactly panned out in the past.
The consumer-friendly move of placing some of its systems in local outlets to provide instant gratification won't cure its operating hiccups. However, it's a move that signals that Dell isn't too proud to learn from its peers.
Dell sees the kissy-poo faces that the market is making for retail-widening rivals like HP and Apple (NASDAQ:AAPL). The catch here is that HP's lovefest is more of a turnaround story, after being buried for years under stagnant operating margins. Apple's success in retail has often been credited to the halo effect of its popular iPod media players.
Reuters is reporting that the Dell bundles -- they'll retain the Dell brand, so don't expect Sam's Choice Dimension Desktops -- will sell for less than $700. Dell has to be careful that it doesn't position itself as too much of a value-minded brand. Gateway learned that the hard way with eMachines. However, when you're stocked between competitors in the wide-open discounted shelves of Wal-Mart, you often don't have much of a choice.
Can the Dell Dude earn his keep as a Wal-Mart greeter? It's a big headline, but will likely be a very small story.
Wal-Mart and Dell have made the cut as Inside Value stock picks. Dell is also a Stock Advisor recommendation. Kick the tires of either newsletter service with a free 30-day trial subscription offer.
Longtime Fool contributor Rick Munarriz had a Dell once, but he's been smitten by HP products ever since. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.
