Original equipment manufacturers provide components for products manufactured by other companies, known as value-added resellers.
FREMONT, CA: Traditionally, an original equipment manufacturer (OEM) is another company that uses its products as components in its products, and then sells the finished product.
The second company is a value-added reseller (VAR) since it adds value to the original product by enhancing or adding additional features or services. The VAR collaborates closely with the OEM, which frequently tailors designs to the VAR's requirements.
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RECOGNIZING OEM
VARs and OEMs collaborate. OEMs produce subassembly components for sale to VARs. Although some OEMs make entire things for a VAR to sell, they often have little direct influence over the final product.
A common example is a link between an OEM of electrical components and a firm, such as Sony or Samsung, that assembles those components to make HDTVs. Or a button manufacturer who provides Ralph Lauren bespoke fasteners bearing the RL logo.
Typically, no single integrated component from an OEM is identified as playing a particularly large role in the final product, which is sold under the corporate brand name of the VAR.
OEMs have traditionally focused on business-to-business sales, whereas VARs target the general public or end users. A growing number of OEMs sell their parts or services directly to consumers.
For instance, people who construct their computers can purchase graphics cards or processors directly from Nvidia, Intel, or businesses that carry these items. Similarly, if a person wishes to perform auto repairs, they may frequently purchase OEM components directly from the manufacturer or a company that carries them.
One of the simplest instances of an OEM is the relationship between an automobile manufacturer and an automobile component manufacturer. Various original equipment manufacturers manufacture exhaust systems and brake cylinders. An automobile manufacturer assembles the OEM components into a vehicle using the components. Dealers then sell the finished automobile to individual consumers.
A second, more recent definition of OEM is prevalent in the computer industry. OEM may refer to the corporation that purchases products and then merges or rebrands them into a new product sold under its name.
Dell Technologies, for example, incorporates Microsoft's Windows software into its computers and sells the entire PC system directly to consumers. Microsoft is the OEM in the conventional sense, and Dell is the VAR. However, the consumer product guide for the computer is likely to list Dell as the original equipment manufacturer.
AFTERMARKET VS. OEM
An original equipment manufacturer is the antithesis of a third-party company that creates parts for the aftermarket. OEM refers to equipment made particularly for the original product, whereas aftermarket refers to equipment manufactured by a different firm that a consumer may operate as a replacement.
For instance, a person needs to replace the ABC Thermostats thermostat designed specifically for their Ford Taurus. They may purchase the OEM part, a replica of their original ABC thermostat utilized during the vehicle's initial production. Or, consumers may purchase an aftermarket item, a substitute manufactured by a different company. OEM parts are those that come from the same manufacturer as the original; aftermarket parts are those that come from another manufacturer.
Typically, people purchase an aftermarket product because it is less expensive (equal to a generic drug) or easier to receive. The quality or performance of aftermarket parts might compromise, despite their compatibility with the original product.
On the other side, aftermarket manufacturers occasionally do a wonderful job making particular components consumers actively seek.
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