Original equipment manufacturer

An original equipment manufacturer (frequently abbreviated OEM) is a company that builds products or components that are used in products sold by another company (often called a value-added reseller, or VAR.) An OEM will typically build to order based on designs of the VAR. For example, a hard drive in a computer system may be manufactured by a corporation separate from the company that markets and sells the computer, or a loudspeaker in a stereo system made by a company that specializes in audio manufacturing.

Related Topics:
OEM - Company - Value-added reseller - VAR - Hard drive - Loudspeaker - Stereo system

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In some usages, a VAR is sometimes called an OEM, despite this being a complete reversal of the literal meaning of both terms. This misunderstanding arises from use of the term OEM as a verb. For example, a VAR might say that they are going to OEM a new product, meaning they are going to offer a new product based on components from an OEM.

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In recent years, some OEMs have also taken on a larger role in the design of the product they are manufacturing. The term original design manufacturer (ODM) is used to describe companies that design and manufacture a product that is then sold under other brand names.

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OEM, when used to describe software, is used to differentiate that version of the software which is bundled with other hardware or software from that same software package sold on its own as a retail package. The packaging and legal rights that come with the OEM versions of a software package generally differ from what is provided with the retail versions, though the functionality of the software tends to be the same.

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OEM software may be licensed under conditions requiring that it be sold with computer hardware. To avoid contravening the conditions while passing OEM software savings on to end users, some retailers will sell OEM software with a "token" hardware device of small cost, such as a tiny SIMM or a cable splitter.

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OEM hardware can be purchased by end users at considerable savings of 30% or more. For example, OEM hard drives are purchased in a simple plastic bag without the additional cables or bulky box found in the more expensive and environment-burdening retail package.

Related Topics:
End user - Hard drive - Environment

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