Dell and Wal-Mart

Is it a failure of a company, the state of the commoditized computer market, or just a sign of the times? Dell’s decision to expand its business into the retail channel by selling through Wal-Mart makes me uneasy. Not for Dell, but for the business model that we’ve touted for years: customer intimacy, a strong supply chain, a masterful inventory model, a robust buy-side application, and good products and support. Just what went wrong? I think, and hope, it’s just economics.

Perhaps we should have seen it coming. When Dell is advertising on the back of Parade Magazine for complete computer systems for less than the cost of a game console, the market has become so commoditized that any growth has to come from untapped or underserved markets. They made the decision that they needed to recapture some of their cost magic.

Maybe Wal-Mart’s legendary supply chain system will work well with Dell’s, and we’ll be reading case studies in the next couple of years about a business relationship made in heaven. While Wal-Mart can most likely absorb a failure, I’m not sure Dell can. Let’s see how this decision impacts two industry icons. We’ll all be watching. And learning.