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Anoriginal equipment manufacturer (OEM) is a company that produces parts and equipment that may be marketed by another company. However, the term is ambiguous, with several other common meanings: an OEM can be the maker of a system that includes other companies' subsystems, an end-product producer, an automotive part that is manufactured by the same company that produced the original part used in the automobile's assembly, or avalue-added reseller.[1][2][3]OEM manufacturing is also widely used in the packaging industry, particularly in the production of customized gift boxes for wine and spirits. These OEM producers allow brands to create unique holiday packaging without maintaining their own manufacturing facilities.[4]
When referring to auto parts, OEM typically refers to the manufacturer of the original equipment, that is, the parts which are then subsequently assembled and installed during the construction of a new vehicle. In contrast,aftermarket parts are those made by companies other than the OEM, which might be installed as replacements or enhancements after the car comes out of the factory. For example, ifFord usedAutolitespark plugs,Exide batteries,Boschfuel injectors, and Ford's ownengine blocks andheads when building a car, then carrestorers andcollectors consider those to be the OEM parts.[5][6] Other-brand parts would be considered aftermarket, such asChampion spark plugs,DieHard batteries, Kinsler fuel injectors, and BMP engine blocks and heads.
Many auto parts manufacturers sell parts through multiple channels, for example to car makers for installation during new vehicle construction, to car makers for resale as automaker‑branded replacement parts, and through general merchandising supply chains. Any given brand of part can be OEM on some vehicle models and aftermarket on others.[7][8]
Not all auto parts are available in OEM versions. In some cases, vehicle manufacturers secure exclusive sales rights for specific components. These parts are produced by contracted suppliers and carry the automaker's branding, but the suppliers are not permitted to sell them independently under their own name.[9]
Microsoft is a popular example of a company that issues itsWindows operating systems for use by OEM computer manufacturers via thebundling of Microsoft Windows. OEMproduct keys are priced lower than their retail counterparts, especially as they are purchased in bulk quantities, although they use the same software as retail versions of Windows. They are primarily for PC manufacturer OEMs and system builders, and as such are typically sold involume licensing deals to a variety of manufacturers (Dell,HP,ASUS,Acer,Lenovo, etc.).
These OEMs commonly use a procedure known asSystem Locked Pre-installation, which pre-activates Windows on PCs that are to be sold via mass distribution. These OEMs also commonly bundle software that is not installed on stock Windows on the images of Windows that will be deployed with their PCs (appropriate hardwaredrivers, anti-malware and maintenance software, various apps, etc.).
Individuals may also purchase OEM "system-builder" licenses for personal use (to includevirtual hardware), or for sale/resale on PCs which they build. Per Microsoft'sEULA regarding PC manufacturers and system-builder OEM licenses, the product key is tied to the PCmotherboard which it is initially installed on, and there istypically no transferring the key between PCs afterward. This is in contrast to retail keys, which may be transferred, provided they are only activated on one PC at a time. A significant hardware change will trigger a reactivation notice, just as with retail.[10]
Direct OEMs are officially held liable for things such as installation/recovery media, and as such were commonly provided until the late-2000s. These were phased out in favor of recovery partitions located on the primary storage drive of the PC (and available for order from the manufacturer upon request) for the user to repair or restore their systems to the factory state. This not only cut down on costs, but was also a consequence of the gradual obsolescence and phasing out of optical media from 2010 onward. System builders also have a different requirement regarding installation media from Direct OEMs.[11][12]
While a clean retail media of Windows can be installed and activated on these devices with OEM keys (most commonly using the SLP key that's embedded in to the system firmware already), actual OEM recovery media that was created by the PC manufacturer (not system-builder, nor retail Windows versions) typically only works on the PC model line that was designed for it. For example, a recovery disc/USB for aToshiba Satellite P50-B will only work on that model, and not a Satellite S55T.
The OEM smartphone manufacturers, such asSamsung,Sony andXiaomi, are manufacturers of hardware and software of smartphones. Such manufacturers usually customize and adapt suitableAndroid operating system, with manufacturer components such asOne UI andHyperOS.
Skateboard decks are primarily produced by a small number of specialized OEMs, such as PS Stix, BBS, andDwindle.[13] These manufacturers handle the entire production process, including sourcing high-quality wood, crafting molds, gluing and pressing multiple layers of veneer, and applying graphics designed by the brands to the decks.[14] Once completed, the finished products are distributed to skateboarding brands, which sell them under their respective labels.
Foxconn is one example of an OEM, which helps upstream companies such asNokia andHewlett Packard Enterprise to manufacture servers. The designed intellectual property are usually owned by upstream companies.
OEMs rely on their ability to drive down the cost of production througheconomies of scale. Using an OEM also allows the purchasing company to obtain needed components or products without owning and operating a factory. B2B platforms are able to leverage economies of scale because more buyers attract more suppliers, and vice versa; this reduces certain costs like transaction costs, and can even increase efficiency and expand the user base.[15] OEM suppliers work with specific brands to produce products that meet specifications and designs, hence they have high production standards.[16] Amazon Business, Alibaba.com, 1968, and others host OEM factories that offer custom manufacturing.[17]
Many customers, such as the Department of Defense, wanted to buy complete systems, all put together and ready to run with the turn of a key; hence the rise of companies known as original equipment manufacturers, or OEMs—they'd buy gear from various companies and put it together in packages.
OEM stands for Original Equipment Manufacturer. The OEM is the original producer of a vehicle's components, and so OEM car parts are identical to the parts used in producing a vehicle. Aftermarket parts are produced by other vendors and do not necessarily have a consistent level of quality or compatibility with the vehicle.
In the automotive industry, OEM refers to the company that designs and manufactures the original components and systems used in vehicles during their initial assembly.
In the auto repair industry, OEM parts are those products used by a car manufacturer. Aftermarket parts are made by a third-party manufacturer but may be compatible with the same vehicles.
OEM parts are made by the car manufacturer, and aftermarket parts, which may cost less, are made by another company.
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