An original equipment manufacturer, or OEM, manufactures products or components that are purchased by a company and retailed under that purchasing company's brand name.^{[ref 1]} OEM refers to the company that originally manufactured the product. When referring to automotive parts, OEM designates a replacement part made by the manufacturer of the original part.^[1] In this usage, OEM means "original equipment from manufacturer".

Confusing and contradictory definitions[link]

OEM may refer to a company that purchases for use in its own products a component made by a second company.^[2] Under this definition, if Apple purchases optical drives from Toshiba to put in its computers, Apple is the OEM, and Toshiba would classify the transaction as an "OEM sale".

Contradictory usage

An even more confusing, contradictory definition is a company that sells the product of a second company under its own brand name.^[3]

Alternatives to contradictory or confusing use

Instead of OEM, companies may label themselves resellers.

Companies who buy parts and then resell those parts with some amount of additional value added along the way (such as assembly, customer support, or continued maintenance) may be better termed value-added resellers (VARs) or resellers.

Automotive parts[link]

When referring to automotive parts, OEM designates a replacement part made by the manufacturer of the original part.^[1] In this context, OEM stands for "original equipment from manufacturer". As most cars are originally assembled with parts made by companies other than the one whose badge appears on the vehicle, it may happen that a car company sells OEM spare parts without claiming to be an OEM itself.

An automobile part may carry the designation OEM if it is made by the same manufacturer and is the original part used when building and selling the product.^[1] The term aftermarket is often used for non-OEM spare parts.^[1]

In purchasing parts at national, discount auto parts retailers (e.g., Auto Zone, Advance Auto Parts, Pep Boys, Napa, etc.), many parts will have OEM prominently displayed -- but followed by a qualifier, such as, "meets OEM standards", etc. Such auto parts are not OEM; they are simply claiming to have been manufactured to the same specifications as the OEM parts. These parts are better termed "OEM spec. parts", although they may carry the label "OEM", instead.^{[citation needed]}

Economies of scale[link]

OEMs rely on their ability to drive down the cost of production through economies of scale. Also, using an OEM allows the purchasing company to obtain needed components or products without owning and operating a factory.

Origin of term[link]

While the term was used in the early 1960s and 70s in the US to refer to value-added resellers,^[4] OEM is currently defined by IBM to refer to "a manufacturer of equipment that may be marketed by another manufacturer".^[5] It may derive from a Dutch phrase, "onder eigen merk", which means "under own brand".^[6]

OEM labeling[link]

Companies also use OEM labels to track the products they manufacture. This allows the company to track the product from the factory, to the warehouse, then to the store where the product is sold. When the store receives the shipment the product is removed from the company’s inventory control system.

See also[link]

• Contract manufacturer
• Golden sample
• Original design manufacturer
• Outsourcing
• Private label
• Rebranding
• Value-added reseller

References[link]

Rob Enderle (born July 27, 1954 in Corona, California) is an American technology analyst.^[1]

Enderle has worked at several technology companies, including EMS Development Company, ROLM Systems and IBM, before becoming a technology analyst. He began his analyst career at Dataquest, before helping to launch GiGa Information Group. After GiGa was acquired by Forrester Research, he worked at Forrester ^[2] until leaving to found his own firm, the Enderle Group.

Enderle covers a wide array of technology companies and related industry topics ^[3] and is frequently contacted by the media for his opinion on breaking news and other happenings in the technology realm.^[4] He has been labeled one of the most quoted technology analysts in the media.^[2]

Enderle writes a number of columns for technological publications and regularly appears on radio and television.^[5] He sits on several advisory councils, including those for the Trusted Computing Group,^[6] Lenovo, AMD, HP, and the Lifeboat Foundation.^[7] He shares a technology blog at Technology Pundits. He has worked as an advisor for Microsoft,^[8] Dell, and Toshiba.^[9]

Comments[link]

Enderle frequently comments in the media on a variety of technology companies, including HP,^[10] Google,^[11] Sony,^[12] Microsoft ^[13] and Oracle,^[14] and on technology-related topics, such as security ^[15] and consumer technology.^[16]

Enderle's analysis of free and open source software, Linux in particular, is disputed by the FOSS community.^[17][18] Speaking publicly in 2004 in a talk announced under the title "Free Software and the Fools Who Use it"^[19] and presented under the title "Free Software and the Idiots who Buy It" Enderle explained his "position on Linux as a Free software scam" claiming that "it doesn't contribute to anything" (i.e. neither any common good nor any private good) and that "it may not even be sustainable on a large scale". He went on to state that those who doubt SCO's right to extract revenue from Linux users "are attacking because they disagree with the legal rights of these companies" without mention that the Linux community believes that SCO is infringing on the rights of Linux's authors.^[20][21] Enderle has consistently and repeatedly recommended against Linux and intimated its failure writing such things as: "Moving away from Red Hat is the better of the two options..."^[22] (2004); "... the PC OEMs don't, and probably never will, fully support Linux on the desktop"^[23] (2006); "Linux exists in an environment where ... the opportunity for traditional, old style, data breach is immeasurable."^[24] (2007).

Education[link]

• California State University, Long Beach, B.S. in Manpower Management, MBA ^[2]

References[link]

External links[link]

• The Enderle Group