Introduction:

An original equipment manufacturer (OEM) traditionally is defined as a company whose goods are used as components in the products of another company, which then sells the finished item to users. An original equipment manufacturer (OEM) provides the components in another company's product, working closely with the seller of the finished product, known as the value-added reseller (VAR). 

An OEM is the opposite of the aftermarket. An OEM refers to something made specifically for the original product, while the aftermarket refers to equipment made by another company that a consumer may use as a replacement. For example, say a person needs to replace their car thermostat, created expressly for their Ford Taurus by ABC Thermostats. They may buy the OEM part, which is a duplicate of their original ABC thermostat that was used in the original manufacturing of the vehicle. Or they may buy an aftermarket part, an alternative made by another company. In other words, if the replacement also comes from ABC company, it is an OEM; otherwise, it is an aftermarket product. Usually, consumers buy an aftermarket product because it's cheaper (the equivalent of a generic drug) or more convenient to obtain. But sometimes aftermarket producers do such a good job in manufacturing a specific part that it becomes well-known to consumers, who actively seek it out.

Hardware OEM:

In the hardware industry, the original equipment manufacturer (OEM) usually refers to a company that builds a product designed for end-users, like a PC, laptop, or printer. Apple, HP, Dell, Canon, and Brother are all examples of original equipment manufacturers. OEM hardware, on the other hand, is the term for parts that make up the products mentioned above. This includes processors, fans, motherboards, memory chips, hard drives, and much more. Companies who build these components usually sell them as OEM hardware to the OEMs. Although processors, motherboards, and so on can also be sold to individuals as retail products, OEM hardware is generally cheaper than their retail counterparts. But there are some tradeoffs. OEM hardware rarely comes with customer support, has very short (if any) warranty periods, and usually lacks some parts needed to combine it with other components of whatever system you’re building. For example, DVD drives might lack cables or ribbons for connecting to the motherboard. This is because OEM hardware is primarily designed for OEMs and those manufacturers are expected to add things like warranties, tech support, and other components when they build complete systems and sell them to end-users.

Software OEM:

An example of OEM in software is when manufacturers like HP, Dell and Samsung purchase Windows as OEM software from Microsoft and then package it together with the PC or laptop they manufacture. Companies that build other devices like printers, scanners and digital cameras buy OEM software too. When you buy these devices, you’ll notice that they’re usually bundled with an accompanying application. That’s the OEM software. Just like OEM hardware, some OEM software can be purchased as a standalone product—and as with OEM hardware, they’re usually much less expensive. But the downsides are also there. Often there’s no tech support or user manual. When you buy these OEM products, know that it’s going to be challenging once you encounter technical issues. Of course, if you really know what you’re doing, then that shouldn’t be a problem.

Products from an OEM are normally cheaper thanks to economies of scale. As the company partners with others to manufacture goods in large numbers, both the price and production time are significantly reduced. However, you need to verify what you’re getting when you purchase a product from an OEM. While the products are cheaper and deliver the same features and performance, you may not receive some of the “extras” like tech support, which would normally be handled by a PC company.