| 1. | a firm that purchases complex equipment, as computers, from manufacturers and modifies or combines different components for resale. |
| 2. | a firm that manufactures components or parts included in the finished product made by another. Abbreviation: OEM |
| original equipment manufacturer n. Abbr. OEM A company that purchases computers or other complex components from manufacturers, adds other hardware or software, and sells the systems, often for specific applications. |
Original Equipment Manufacturer - OEM
1. The original definition: a company whose products are used as components in another company's product. The OEM will generally work closely with the company that sells the finished product (often called a "value-added reseller" or VAR) and customize the designs based on the VAR's needs.
2. The more recent definition: a company that buys a product and incorporates or re-brands it into a new product under its own name.
Investopedia Commentary
There isn't a typo here; the two definitions do contradict each other. This term has become very confusing since it now can be used in both contexts. OEM sometimes means the company that sells the component to the the VAR, and other times it refers to the VAR who is acquiring a product from an OEM. The reason for this is that "OEM" (the abbreviation) is sometimes used as a verb instead of a noun. For example, a manufacturer might say that it is going to OEM a new product, meaning it is going to produce a new product based on components bought from an OEM.
The term is most often used in the computer industry, where products such as Windows will be referred to as OEM. A company like Dell Computers will incorporate the Windows operating software into its computers and sell the computers to its customers with the Windows product installed.
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Also spelled: OMEOEM
Original Equipment Manufacturer company
(OEM) A misleading term for a company which repackages equipment, such as computers, made by other companies. Unlike a value added reseller, an OEM does not necessarily add anything except their name to the product. In some cases though they may integrate components into complete systems. OEM arrangements are often made for marketing reasons.
[Origin?]
(2001-04-09)