An Original Equipment Manufacturer (OEM) is a company that produces parts and equipment that may be marketed by another manufacturer. For example, if Acme Manufacturing Co. makes power cords that are used on IBM computers, Acme is an OEM.
However, the term is used in several other ways, which causes ambiguity. It sometimes means 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 a value-added reseller.
Video Original equipment manufacturer
Automotive parts
When referring to auto parts, OEM refers to the manufacturer of the original equipment, that is, the parts 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 after the car comes out of the factory. For example, if Ford used Autolite spark plugs, Exide batteries, Bosch fuel injectors, and Ford's own engine blocks and heads when building a car, then car restorers and collectors consider those to be the OEM parts. Other-brand parts would be considered aftermarket, such as Champion 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 OE on some vehicle models and aftermarket on others.
In May 2014, however, despite that fact that the Commission and the European Parliament majority had fully supported the Repairs Clause, the European Commission withdrew its proposal to introduce a Europe-wide Repairs Clause in the Design Directive due to the 10 years of discussion, delay, postponement and blockage, from some Member States in the Council of Ministers (France, Germany, Sweden, Czech Republic, Romania and Slovenia). The consequence of this withdrawal today is a non-harmonised internal market for automotive visible spare parts, a patchwork of conflicting national laws. Member States which do not have a repairs clause in their design law will continue to allow protection and enforcement of the vehicle manufacturers' design rights on visible must match parts against producers or related spare parts. On the other hand, in Member States with a repairs clause in their design law, the consumers can choose between competing suppliers of parts and repair services - the vehicle manufacturer network and the independent aftermarket, at prices kept low by competition.
The purpose of design law is to protect the appearance of the product, not the product itself. If we consider the car market: protecting the design of a car does not hamper or exclude competition in new cars. Consumers can still choose between many different cars, even if all of them are design-protected.
AIRC General Secretary and ECAR Board Member Karel Bukholczer made the remark that the market for spare parts has to be approached as a very different market. To repair the "outer skin" of a car and thus restore its original appearance, the spare parts must look exactly like the component to be replaced (it is a "must match" spare part). No design alternatives are possible. Therefore, if design protection is extended to "must-match" spare parts, competition in the market of visible spare parts is completely eliminated for all parts registered for design protection. Unlike its effects on the market for new cars, applying design protection to "must-match" spare parts gives the vehicle manufacturer a product monopoly on parts registered for design protection; deprives vehicle owners from any choice and makes them captive consumers. Extending design protection to visible spare parts is an abuse of the rule's intent: instead of fostering competition, it leads to product monopoly and to monopoly pricing. ( See http://www.ecar-alliance.eu).
Maps Original equipment manufacturer
Computer software
Microsoft is a popular example of a company that issues OEM software for their Windows operating systems. OEM product keys are priced lower than their retail counterparts, but use the same software as retail versions of Windows. They are primarily for direct OEM manufacturers and system builders, and as such are typically sold in volume licensing deals to a variety of manufacturers (Dell, HP, ASUS, Acer, Lenovo, etc.). Individuals may also purchase them for personal use (to include virtual hardware), or for sale/resale on PCs which they built. Per Microsoft's EULA regarding OEM, the product key is tied to the PC motherboard which it's initially installed on, and there is typically 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.
Direct OEMs are officially held liable for things such as installation media, although they are not required to provide it upon sale of a PC hardware, and may indeed exclude it to reduce cost. Instead, manufacturers tend to include a recovery partition on the primary storage device for the user to repair or restore their systems to the factory state. System builders further have a different requirement regarding installation media from Direct OEMs. On versions of Windows which require a valid product key for media download from Microsoft (like Windows Vista, 7, 8, 8.1, 10), OEM keys will be rejected, and the party will be given a notice to refer to the manufacturer.
Economies of scale
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.
See also
- Rebranding
- Private label
- Store brand
- Original design manufacturer (ODM)
- Electronics manufacturing services (EMS)
- Contract manufacturer
- Secondary market
- Value-added reseller
- Open design
- Open hardware
- Outsourcing
References
Source of the article : Wikipedia
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