What exactly is Original Equipment Manufacturer and how can people benefit from it?
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. The reason why an increase in selling price is necessary is because these components that original equipment manufacturer create are often times customized.
The best example to be given for this kind of relationship between two companies would be that of an auto company that orders car parts from another company. There is a wide variety of car parts that original equipment manufacturer custom made for reputable companies. All the OEM would have to do is create the custom made parts and send them to the automobile company where these parts are then assembled into a car. If the final product did not have parts made by other companies then you would expect it to be cheaper.
As the world rapidly advances, OEM also advances with it and now these companies have a new term used specifically by companies under the computer industry. The OEM is the one that would create a product, another company would buy the product, rebrand it by incorporating it into their product, and then sell it off under their company name. 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.
When you run a business, there will always be a need for support from other companies especially if you are producing goods or products that have various parts in them and you are not the expert manufacturer of all parts. 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. The two companies may be working hand in hand to create the final product they can sell but in reality, the OEM just handles the making of the components and it would be solely up to the VAR to handle the finish product.