What is an OEM?

Related Terms: VAR, ODM, OEM Services
 

What is an OEM?

OEM is an initialism that stands for Original Equipment Manufacturer. The term is most commonly used to refer to the party responsible for producing goods for sale. However, OEM can be a misleading term in the technology industry as it's frequently used to refer to a company that maintains a relationship with the original manufacturer which allows them to sell products under their own name. Commonly, hardware resellers are responsible for the service and support of the products they offer and may customize them by adding included peripherals or software, appearing to their customers as the OEM, despite the fact that they were not the ones who originally manufactured the hardware. It's a confusing quirk of the IT industry as these type of vendors are also sometimes called Value Added Resellers (VARs).

 

OEM vs ODM

One other common term worth understanding is Original Design Manufacturing (or Manufacturer). In an ODM relationship the full specifications of a project are dictated by the reseller of the hardware product. ODM relationships are common in international manufacturing deals where an overseas design firm might use a company closer to their customers to manufacture a product for sale. Ideally, OEM, ODM and VAR relationships all inherently combine the strengths of the companies involved in order to benefit both parties in producing the best quality product for their customers, regardless of who's ultimately identified as the original equipment manufacturer.