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Wal-Mart Counting on Sales of Cheap Laptops

Wal-Mart Stores has expanded its laptop selection by 40 percent and will be aggressive in pricing the computers and the accessories to go with them as the discount retailer looks to win sales from frugal back-to-school shoppers.

Starting this Sunday, Wal-Mart (NYSE: WMT) will begin selling an exclusive Compaq Presario notebook computer that it developed in partnership with Hewlett-Packard (NYSE: HPQ) for $298. A similar unit currently sells at Wal-Mart for $548.

"We think that that's a screaming value," said Gary Severson, Wal-Mart U.S.'s senior vice president of home entertainment, in an interview. "You're going to see us focus dramatically not only on price, but the value for that price."

The Presario notebook will be selling at a price that would normally purchase a less-capable netbook laptop.

Retailers have started the back-to-school shopping season on shaky ground as consumers show an unwillingness to spend on anything but basic goods.

According to a National Retail Federation survey, the average family with children in kindergarten through 12th grade plans to spend 7.7 percent less on school gear this year than a year ago.

One bright spot in the survey was consumer electronics, where students plan to spend more. In addition, nearly 75 percent of respondents said they intend to shop at discount stores for their new school purchases.

Wal-Mart is looking at the back-to-school season as a chance to showcase its expanded selection of notebook and netbook computers, with Severson saying laptops are becoming a staple item for students of all ages.

"We think that this year is really the opportunity for us to establish in laptops," Severson said.

To gain leadership, Wal-Mart is following tactics it used to become a major player in flat screen TVs -- expanding its selection of name brands while trying to beat the competition on price.

Dell laptops in pink and aqua

Wal-Mart has already started its back-to-school push in earnest and is offering Dell Inspiron laptops for $398 in colors ranging from pink to purple to aqua.

The retailer also stocked accessories to match the colorful laptops, like $60 Western Digital hard drives and $25 Logitech cordless optical mice in black, blue, pink and red.

Wal-Mart said the Dell (NASDAQ: DELL) offering was a popular one, and it expects a similar response for the Compaq Presario that goes on sale July 26. It will have 3 gigabytes of memory, a 160 gigabyte hard drive, and it will come preloaded with Microsoft's Windows Vista operating system.

On Sunday, Wal-Mart will also cut the price of an Acer laptop with an 8-hour battery by $50 to $548. The computer has 3 gigabytes of memory, a 320 gigabyte hard drive and qualifies for a free upgrade to the Windows 7 operating system when it is released.

Wal-Mart will unveil more offerings during the summer, like a mini netbook by Hewlett-Packard and a Dell laptop with 4 gigabytes of memory and a 500 gigabyte hard drive.

"There's no question that our customer is shifting from a desktop solution to a portable laptop solution," Severson said.

He also said Wal-Mart views low-cost netbooks as a "growth" category. Netbooks, the bare-bones PCs, generally sell for $300 to $400, but prices are dropping as new offerings flood the market and wireless carriers offer subsidies with the purchase of a data plan.

Severson said Wal-Mart is looking at ways to offer shoppers deals on netbooks that come bundled with a wireless plan.

"We're having conversations with carriers and with the hardware manufacturers around that, and are really trying to find where that great value sweet spot is," he said.

While some customers are attracted to netbooks by their low prices, Severson said they do not always realize its capabilities are limited compared with a notebook computer.

"There is an education process that has to happen with the customer, and we're working on how we can improve that because there is a confusion factor," he said.

This back-to-school season marks the first one without consumer electronics retailer Circuit City, which closed its stores earlier this year. Retailers including Wal-Mart, Best Buy and Amazon.com are now battling to win the business of its former shoppers.