What is an Original Equipment Manufacturer (OEM)?

 

Original Equipment Manufacturer vs. Value-Added Reseller

Essentially, Value-Added Resellers or VARs sell products from an OEM but incorporate certain added features before doing so. The two share a mutually beneficial relationship, as VARs help OEMs sell their products and OEMs entrust their products to VARs, allowing them to sell them with more features that will enhance the operation of the products.


An Original Equipment Manufacturer or OEM is a company that manufactures and sells products or parts of a product that their buyer, another company, sells to its own customers while putting the products under its own branding. OEMs commonly operate in the auto and computer industries.

Other Characteristics of an Original Equipment Manufacturer

 

1. OEMs sell licenses

OEMs typically sell product licenses to use their parts to the value-added resellers they market to.

 

2. OEM for hardware

Hardware can be easily bought off the internet, whether from a retail product manufacturer or through an OEM. However, OEM hardware is usually shipped incomplete of parts such as cables and adapters that are necessary for the installation and operation of the hardware.

 

3. OEM for software

OEM software, like the hardware, usually doesn’t come with a lot of stuff, except for the basic software and its license key.

 

Benefits of Buying Original Equipment Manufacturer Products

Here are some benefits one gets from buying OEMs:

 

1. Good quality

And why not? After all, an OEM product is the same product manufactured by the original manufacturer. Though there are cheaper versions, the price of the OEM product reflects its quality.

 

2. Durability

Such products are usually not only of good quality but are also durable. For example, when buying a spare tire, an OEM tire is typically better than getting an aftermarket tire because one can be sure of the materials used in making it.

 

3. Lifespan

OEM parts often have a longer lifespan than aftermarket parts.

 

Additional Resources

CFI offers the Financial Modeling & Valuation Analyst (FMVA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following CFI resources will be helpful:

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