Original equipment manufacturer
An original equipment manufacturer, or OEM, manufactures products or components that are purchased by a company and retailed under the purchasing company's brand name.[1][2][3][4][5] OEM refers to the company that originally manufactured the product.
When referring to automotive parts, OEM designates a replacement part made by the manufacturer of the original part.[6]
Confusing and contradictory definitions
OEM may also refer to a company that purchases--for use in its own products--a component made by a second company.[7][8][9] For instance, under this definition, if company 'A Inc' purchases optical drives from company 'B Ltd' to put in 'A Inc' computers, then 'company A' is the OEM.
An even more confusing, contradictory definition is a company that sells the product of a second company under its own brand name.[10][3]
Companies who follow the above practices may be better termed value-added resellers (VARs) or resellers, respectively.
Economy of scale
OEMs rely on their ability to drive down the cost of production through economies of scale. Also, using an OEM allows the purchasing company to obtain the needed components or products without owning and operating a factory.
Automotive parts
An automobile part may carry the designation OEM if it is made by the same manufacturer and is the original part used when building and selling the product.[6] The term aftermarket is often used for non-OEM replacement parts.[6]
Origin of term
OEM is defined by IBM to refer to "a manufacturer of equipment that may be marketed by another manufacturer".[1]
The term was used in the early 1960s by Digital Equipment Corporation and its vendors to refer to value-added resellers.[9]
See also
- Contract manufacturer
- Golden sample
- Original design manufacturer
- Outsourcing
- Private label
- Rebranding
- Value-added reseller
References
- ^ a b Dictionary of IBM and computing official IBM site
- ^ What is OEM? wisegeek.com
- ^ a b OEM searchitchannel.com's Definitions
- ^ Tracy Kidder ((C)1997). "The Soul of a New Machine - CHAPTER ONE- How to Make a Lot of Money- 16th paragrapgh, "companies known as original equipment manufacturers, or OEMs"". Random House Inc. ISBN 0-679-60261-5. Retrieved 2008-08-08.
{{cite news}}: Check|archiveurl=value (help); Check date values in:|date=(help) - ^ Moving On The Economist, Jan 13th 2005
- ^ a b c Original Equipment Manufacturer (OEM) and Aftermarket Parts thepartsbin.com
- ^ OEM Definition helpwithpcs.com
- ^ OEM Definition answers.com
- ^ a b Ken Olsen economicadventure.com Cite error: The named reference "Olsen" was defined multiple times with different content (see the help page).
- ^ OEM webopedia.com