Original Equipment Manufacturer

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What Does Original Equipment Manufacturer Mean?

Original equipment manufacturer (OEM) is the manufacturer that first produced hardware that is then sold to a company that markets the hardware under its own name. Computer companies may need a part or parts for a product and will often purchase the product from another maker. The company will advertise the part or product as its own, even if it was manufactured by another company. This is considered a perfectly legal marketing tool because a contract for resell has been signed by the involved companies.

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Another name for OEM is contract manufacturer.

Techopedia Explains Original Equipment Manufacturer

OEMs have the ability to produce hardware at a reasonable price due to mass production. This relationship also benefits the company that purchases that hardware because it won’t have to invest design time, labor and other manufacturing costs to produce it. For example, suppose that Toshiba, a company that manufactures optical drives, sells these drives to Apple for its computers. Apple then markets the drives as part of an Apple product. Apple doesn’t have to give Toshiba credit for having produced the optical drives by including the Toshiba name in Apple marketing campaigns or by including it on Apple computer packages. That said, it never hurts to mention an OEM giant like Toshiba.

OEMs are well aware that the purchasing company is adding value to their original hardware products when they are resold. In this way, purchasing companies are able to outsource some of their product development.

The origin of the OEM term may derive from the Dutch phrase, onder eigen merk. Translated to English, this means under own brand.

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Margaret Rouse
Editor

Margaret jest nagradzaną technical writerką, nauczycielką i wykładowczynią. Jest znana z tego, że potrafi w prostych słowach pzybliżyć złożone pojęcia techniczne słuchaczom ze świata biznesu. Od dwudziestu lat jej definicje pojęć z dziedziny IT są publikowane przez Que w encyklopedii terminów technologicznych, a także cytowane w artykułach ukazujących się w New York Times, w magazynie Time, USA Today, ZDNet, a także w magazynach PC i Discovery. Margaret dołączyła do zespołu Techopedii w roku 2011. Margaret lubi pomagać znaleźć wspólny język specjalistom ze świata biznesu i IT. W swojej pracy, jak sama mówi, buduje mosty między tymi dwiema domenami, w ten…