Dell needs to experiment with Wal-Mart

With its profits and revenue declining, Dell Inc. (NYSE: DELL) had little choice but to offer some models at Wal-Mart Stores Inc. (NYSE: WMT).

Dell is using this experiment to see how customers react to seeing it in retail and to see if it can move product through the world's largest retailer. If so, it can use that as ammunition with other retailers. Are customers going to care (or want) to buy a Dell at Wal-Mart, where the nation shops for low prices? Will Wal-Mart compete with CompUSA and Best Buy all of a sudden? Nah.

Dell's retail "pinkie in pool" test here will reveal many things for the computer maker regardless of its success or not, and will probably form some kind of guide on Dell's coming ambition to really enter retail. The damage Dell could do to its brand by associating with a retailer that has a floundering image at the moment may happen, but it's a risk Dell is willing to take for a hard lesson to be learned.

Dell will be selling two lower-end Dimension PCs (like its lowest-end E521) at Wal-Mart in per-configured fashion (no custom building here). Even if Wal-Mart was to sell a dozen PCs in every Wal-Mart across the U.S., the total sales would have little effect on its earnings.

I'm not sure I agree with Dell that Wal-Mart "knows its customers" since it's the largest retailer that exists; most consumers just want low prices, and that is why they are there, period. Dell will now take on that image a bit -- but can it afford not to?