This article aims to discuss the definition of what an Original Equipment Manufacturer and how it works.
The simplest definition of what an original equipment manufacturer is that this is a company that creates certain parts of products or goods being made by other companies. The term value-added reseller or VAR can be applied to this practice since the price of the final product can be increased due to some parts being made by other companies. As you might have already figured out, these products made by an original equipment manufacturer would be custom made parts of a final product and this is the main reason it becomes quite expensive.
If you would take your car and break it down into pieces, you would most likely see parts that are stamped with a different company name. These parts they create are custom made for each car company and cannot be sold to just any automobile company, making it expensive. Once the product has been completed, it will then be sent to the car company sellers to be sold to whoever wants a new car.
However, this definition of OEM is now somewhat obsolete today because the computer industry, an industry that is getting bigger and bigger at a faster rate than any other company, has made a new definition for these companies. Rebranding is the most important terminology here because this is exactly what companies do tot he products or components that they buy off other companies. A good example of this would be computer software being made by one company while other companies that sell computers would buy these software, use it in the computers they produce, and then sell them of under one brand name, their very own brand name. Because the buyer of the software is the one that does the rebranding, they would be the company that is considered to be the OEM.
Now let us dig deeper on how the OEM really works.
It cannot be denied that the OEM and the VAR would always be companies that work hand in hand. The production of certain parts is an important aspect in the finish product and in making a sale, which makes EOMs very valuable to VARs. It would be very rare for you to see an OEM asked to be a part of the decision-making process on the final product because they just usually make parts and sell them to VAR companies, nothing else.