May 24 (Bloomberg) -- Dell Inc. said it will sell personal computers at Wal-Mart Stores Inc., in the biggest step away from its direct-sales strategy since the company was dethroned by Hewlett-Packard Co. as the industry leader.

The decision is the first move in a plan to sell through retailers worldwide, Dell spokesman Bob Pearson said today. The second-largest PC maker will have two Dimension desktop models in more than 3,000 Wal-Mart stores in the U.S., Canada and Puerto Rico on June 10.

Michael Dell, who built the Round Rock, Texas-based company by shunning retailers and selling on its Web site and by phone, said this month he would seek partnerships with resellers to help revive sales and profit. That shift comes after Dell lost the PC market lead to Hewlett-Packard and sales growth fell to its lowest level in five years.

``It's essential that Dell expand its distribution,'' said Charlie Wolf, president of Wolf Insights Inc. in New York, which tracks the PC market. He personally owns Dell shares. ``The direct distribution model has run out of steam in certain markets, and Dell's pretty much captured the majority of people who are willing or prefer to shop direct.''

Shares of Dell fell 37 cents to $25.89 at 4 p.m. in Nasdaq Stock Market trading. They have gained 3.2 percent this year. Wal-Mart, the world's largest retailer, gained 32 cents to $46.65 on the New York Stock Exchange.

Wal-Mart said the PCs, which Dell will design exclusively for its stores, will each be sold as part of a ``package bundle'' for less than $700. The PCs will have chips from Advanced Micro Devices Inc., Dell said on its Direct2Dell.com blog.

Global Push

``Our customers are asking us for additional ways to purchase our products,'' Pearson said in an interview. ``While we can't get into specifics, in the coming quarters there will be additional activity in support of this move into global retail.''

As Dell worked to fix customer service problems in the U.S., the world's largest PC market, Hewlett-Packard won consumers with notebook PCs. Hewlett-Packard sold low-priced machines through retailers where shoppers could touch and see before they bought.

Hewlett-Packard works with more than 100,000 retailers worldwide to sell PCs, including Bentonville, Arkansas-based Wal- Mart and Richfield, Minnesota's Best Buy Co., the largest U.S. consumer-electronics retailer.

Those partners contributed to a 26 percent jump in Hewlett- Packard shipments in the U.S. in the first quarter, according to Framingham, Massachusetts-based researcher IDC. Dell fell 14 percent. Hewlett-Packard, which lost the market lead to Dell in 2003, has claimed the top spot for the past three quarters.

Not a Religion

Hewlett-Packard Chief Executive Officer Mark Hurd considers the retail network a ``pretty important asset.'' The Palo Alto, California-based company already vies with rivals for shelf space, so Dell's entry won't change Hewlett-Packard's strategy, he said last week amid speculation about Dell's plans.

``You can't get obsessed with this competitor, that competitor,'' Hurd said in a May 16 interview. ``We're focused on trying to understand the markets and the customers we serve.''

The deal with Wal-Mart comes less than a month after Michael Dell, 42, told employees in an e-mail that the ``direct model has been a revolution, but is not a religion.''

With 90 percent of U.S. households shopping at Wal-Mart, the deal brings Dell access to new customers, Wal-Mart spokeswoman Melissa O'Brien said. Dell is ``a brand name that is recognizable for a certain type of customer we want to attract,'' she said.

It is the latest change by Dell, who retook the CEO title in January as sales slumped and customers defected. He reshuffled senior management staff, ousting his handpicked successor Kevin Rollins after less than three years as CEO.

New Approaches

He promised to devise new approaches to manufacturing and distribution to cut costs and help regain the price advantage once held over rivals including Hewlett-Packard, which copied the innovations pioneered by Dell to offer lower-priced systems.

In a May 16 interview with CRN.com magazine, he said Dell had ``aggressive'' plans to reach customers who don't want to buy direct. Sales through resellers account for $4 billion, or about 7 percent, of Dell's annual revenue, the company said.

Dell has sold through retailers in the past, including a 2005 deal with Costco Wholesale Inc. The company opened a 3,000- square-foot retail showroom in Dallas in July to give customers a place where they could touch and see products while still placing orders online or by phone. Plans for a showroom in West Nyack, New York, were canceled this year.

While Dell needs retailers, the related costs for items such as adjusting its inventory and changing production may not help boost profit in the near term, JP Morgan Securities Inc. analyst Bill Shope said in a report. He rates the shares ``neutral.''

``We remain cautious as to the effects of the channel expansion on the company's bottom line,'' Shope said.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: May 24, 2007 16:08 EDT