November 3, 2002 3:07 PM PST

Dell selling PCs at Costco

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PC giant Dell Computer has been expanding its sales by appearing on shopping channels and at kiosks in malls--and now it's going to the discount chains.

Dell is selling Pentium 4 computers on Costco.com, the online site for the king of club stores. The 2GHz Dimension sells for $1,049.

The move is unusual for Dell, which sells nearly all of its PCs directly to customers and businesses. The Austin, Texas-based company tried unsuccessfully to sell consumer PCs in stores years ago.

In the past year, however, Dell has begun to rely on additional sales outlets. The company, for example, began to make a "white box," or unbranded, PCs for small dealers in August.

A Dell representative could not be reached for comment.

Discount chains have graduated from being a clearing house for excess PCs to a genuine sales channel. Companies often use the chains to test new configurations.

"The club/warehouse channel has been one of the fastest-growing outlets for today's PC placement," wrote Toni Duboise, an analyst at research firm ARS. "ARS feels that Dell's atypical appearance only gives credence to rival HP's increased penetration of the club/warehouse sector, but is consistent with the direct manufacturer's antagonistic strategies."

Hewlett-Packard is likely to closely scrutinize Dell's move. HP came out with its first PC containing an Athlon chip from Advanced Micro Devices with a configuration sold at Sam's Club and Costco.

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