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What is an Original Equipment Manufacturer?

This article aims to discuss the definition of what an Original Equipment Manufacturer and how it works.

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.

A good example would be car companies since cars have various parts in them and these parts are not all made by one company. It is not uncommon for brake cylinders or exhaust systems of cars to be produced by an OEM. The sole role of OEM is to produce components because other tasks such as assembly or incorporation of these components to the final product would be the job of the company they are working with.. It cannot be denied that the more original equipment manufacturers are involved in make car components, the more the car becomes expensive.

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. A simple example here would be a person making someone else create an engine for the machine he is creating and then once he gets the engine, the would then rebrand it and put it inside the machine he has creted before selling it off as his own invention. If we are talking about the computer industry, the most common occurance would be once computer company creating a certain software and then selling it off to another computer company for then to incorporate in their final product, a product that they brand with their name only. The OEM in this case would be the company tat does the incorporation and rebranding of the computer component they bought from another company.

How does an OEM operate?

It cannot be denied that the OEM and the VAR would always be companies that work hand in hand. You need to keep in mind that a product cannot be sold if it lack certain parts and this is the very reason why OEMs are very valuable. The EOMs has specific responsibilities on create parts but they have no say on how the final product will be made.

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