Full Form of OEM :
Original Equipment Manufacturer
OEM Full Form is Original Equipment Manufacturer. Originally this term was used to refer to the actual manufacturer of any product. Though the product might be sold to other companies and rebranded, the OEM referred only to the original maker of the product. In these days, the manufacturer or the reseller whoever reaches the product to the end customer is termed as OEM. So in other words, OEM is the value-added reseller of a product. In the IT world, the variations in OEM include; hardware OEM and software OEM. Hardware OEM refers to companies that acquire a vendor’s products and resell it by rebranding the same. This may not involve any modification to the original product. On the other hand, a software OEM embeds another vendor’s software technology into its application.
OEM Full Form – Additional Information
Original Equipment Manufacturer, which will hereinafter be referred to as OEM throughout the article, is actually a company that manufactures subsystems or parts used by other companies in their end products. Take, for example, If a certain company, say, Mega Electronics Ltd. manufactures power cards, which the multinational company IBM uses in its computers then Mega Electronics Ltd. is an OEM.
Thus, the abridged expression is used for the purposes of describing the primary characteristic of the company. The term OEM holds great relevance today, especially in categorizing the companies. It is indicative of the functional element of a company and therefore, need sufficient elucidation. So, for ensuring a better understanding of the term among readers, here are five points about OEM that must be known. These points shall refer to various kinds of usages of the term in different industries.
The first category where OEM is excessively used is with reference to those companies that engage in the manufacture of automotive parts. When making a reference to automotive parts, OEM is used to address the original manufacturer of automotive parts, which are made at the time of creation of a new automobile. Much to the contrary, aftermarket automotive parts are those which are manufactured by companies not being OEM.
These aftermarket parts act as replacement parts for those cars or other vehicles out of the factory. Suppose, Fiat comes out with a brand new car. It manufactures the parts along with the car and thus, uses everything that belongs to Fiat. Once the car is out of the factory, there are replacement parts available from other brands such as Exide batteries (Which may replace original batteries of Fiat cars). Many automobile manufacturers market parts with the help of multiple channels.
The second category is the companies engaged in the manufacture of computer software. Microsoft is one famous example of an OEM company, as it manufacturers OEM software for its operating systems. The price of OEM product keys is lower than that of their retail counterparts. They are mainly for the direct use of system builders and OEM manufacturers and are generally marketed in large volumes to manufacturers such as Toshiba, Dell, and HP.
Direct OEMs are held liable for a host of things such as the installation media, even though they are not bound to provide it on the sale of the hardware and may exclude them for the purposes of reduction of cost. However, manufacturers generally include a recovery partition on the hard drive to assist the user in restoring or repairing their computer systems to the factory setting. System builders may have different requirements for allowing installation of media from direct OEMs.
Economies of Scale
Under this head, our focus is on the economies of scale as far as OEM is concerned. OEMs put reliance upon their abilities to bring down the cost of production by means of economies of scale. Additionally, an OEM facilitates the company, which is essentially the purchasing company, to procure necessary products or related components without the need to own or operate a factory. Thus, there are several advantages attributed to OEMs.
Issue with the use of OEM term
The term, however, is used in different ways, which has resulted in a lot of confusion. Often the term OEM is used to refer to the manufacturer of a system which covers subsystems of other companies; sometimes to refer to a manufacturer of end products; manufacturer of automobile parts, and even sometimes to refer to the value-added reseller. Thus, even though the use of OEM in its entirety beneficial, there are certain issues which need to be looked into.
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