Everyone who's interested in the Dell to Wal-Mart retail scenario wants to get a better idea of just exactly what Dell intends to do over there. We all know that Wal-Mart (NYSE: WMT) is the "Low Price Leader", so how does this play out for Dell (NASDAQ: DELL)? Being that my Dell corporate headquarters spy drones are down for repairs and my Wal-Mart corporate spy cams have been taken off line, I can only speculate on the intended direction which Dell's move is going to take. Over at Engadget the response to this move has been tepid, or leaning towards not well received.

First, let me say that at its root this Dell move is an excellent idea. By that I mean Dell has needed a direct outlet to the consumer for quite some time. Some of the tech sector analysts where aghast when they heard of this move because they had quickly assumed that Dell was changing over their entire marketing strategy to volume by low price but I assure you that's not what's happening here. Dell will still be building the lion's share of its desktop computers to customer order and shipping them direct. Wal-Mart, for the time being at least, shall only be handling a couple exclusive Dimension desktop models and I expect a select few notebook and laptop models. I predict also that as Dell earns Wal-Mart shelf space, there will be other Dell branded consumer electronics moving in there, but probably never their full desktop line.

Wal-Mart is historically demanding in their requirements for wholesale purchasing. They set the prices, the volume and the time tables. It's very much a take it or leave it world when selling to Wal-Mart. To me, it's kind of a sign of desperation that Dell has opted to go this route. I honestly thought that a Radio Shack (NYSE: RSH) scenario would play out to a much greater advantage for Dell than this Wal-Mart strategy. Is this a sign that as consumers we're expected to cheapen our expectations when thinking of Dell? I assure you that is what will happen. I'm expecting to spend about $2000 on a new PC next year. Perhaps it will be a Hewlett-Packard (NYSE: HPQ) after all.

Now, if you'll excuse me, I have to get to work on these spy drones.

Hewlett Packard Company (NYSE: HPQ) reported strong results last night, however, it appears industry headwinds could slow down growth in the second half of 2007.

• Laptop revenue grew 45%, with units up 61%
• Desktop growth was up 9%
• Ergo, the total personal computer business was up 24%

HP is growing 2.5x the market growth rate in the PC space, a sign of very good execution. Imaging and printing saw revenues up 6% and units up 11%, a deceleration in growth. Enterprise storage and services up a very respectable 8%.

HP continues to execute extraordinarily well while operating in very competitive industries. What was most promising regarding last night's call is that CEO Hurt is still highly confident that more cost savings can be found.

Entering the seasonally weak period for this sector, there is no need for investors to rush into HP's stock. "We will see what happens to unit growth and mix going forward," said Hurt during the call, suggesting he might be seeing signs of weakness in the economy. I'd wait for the weak seasonal period to end and then jump into HP's stock.

The general consensus on yesterday's announced partnership between Google and Dell to pre-load Google's search toolbar and homepage on Dell PCs seems to be: Google + , Microsoft - and Dell ~. According to Moors & Cabot research VP Cindy Shaw, as quoted in the New York Times, "It's a slight positive for Dell ... But it will not solve Dell's larger issues. It's not going to be what gets people to buy a Dell."

Dell's bigger issues include a major decline in profit, and no one seems to think this partnership will result in huge additional revenues for the nation's biggest PC manufacturer. Good Morning Silicon Valley puts most of the analysis in their headline regarding the deal, wondering, "How soon can we get these Google apps added to the Dell De-crapifier?", and mentioning that it's a net positive for Google in the search wars: "It's a turnkey solution for Google as well, at least when it comes to wresting control of PC users' default settings away from Microsoft." Meanwhile, Garett Rogers at Googling Google "didn't realize this was news" and hopes for Google software on every Dell sold and -- no, that's not all -- wants even more deals in the future.

For Amit Agarwal, it's not the smiley happy party it seems to be for the Google fans 'round the net. He warns glumly in a tantalizing headline that the deal is "Dangerous for Desktop Search Industry." He worries that default-setting-not-changing users will "miss the innovations from other desktop search companies" and wonders how long it is until Microsoft runs to the DOJ, as Google just did in anger over Vista's default-happy browser. Steve Bryant from Infoweek seems to agree with the general negative feelings towards Google, calling the company an "infovore."

It seems only yesterday when Microsoft's position atop the lucrative desktop software market was so unassailable that the FTC had to bust them for monopolistic behavior. Oh wait: it was yesterday. That's why news of Dell and Google agreeing to install Google software on Dell PCs met with a round of gasps heard from Wall Street to Fleet Street.

It's been 10 years since Microsoft first began making deals to pre-install its software on home computers, and the bet was a good one, prompting Microsoft to a seemingly insurmountable lead in the desktop software market. But now Google software will sit in Microsoft's place.

The impact on Microsoft could be stunning. While sales from the "Client" division only make up about 29% of Microsoft's sales as of the most recent quarter's results, those sales represent 63% of the company's operating income. Were the client sales to be impacted only by 10% as a result of this Dell/Google deal, or about 3% of the overall revenue, 7% or more of the operating income would be erased: a serious threat indeed. Fortunes are made or lost on high-single-digit drops in operating income.