The term OEM is used a lot in the tech world. In this article we explain what it means that a product is OEM, why they are so widely used and what are their advantages. You are ready? We started.
What are OEM products
To understand what OEM products are, you first need to clarify how companies can act to get the products they need to do their jobs.
On the one hand, there are companies that manufacture everything they need themselves, that is, they do not turn to other companies to produce their products. On the other hand, there are companies that buy products from other companies in order to do their job .
Xiaomi is an example of a company that buys products from other companies, since they do not manufacture their own batteries, nor the screens, nor the processors, nor many other components. These types of companies that turn to other companies to be able to manufacture their products are those that use OEM products.
Therefore, an OEM product is a product that one company produces for use by another company . Windows licenses are another example, Microsoft sells them to computer manufacturers, so that they install them on the computers that they then sell to users. OEM stands for Original Equipment Manufacturer.
Qualcomm and Microsoft are two examples of companies that manufacture OEM products. The former is a company specializing in the design of processors, while the latter sells Windows licenses.
Advantages and disadvantages of OEM products
The advantages of OEM products are many, one of the most important being the reduction in production cost. Suppliers of OEM products specialize in their production, making the cost less than it would be if it were to be manufactured by the company that will eventually use it. This greater specialization also means greater control over the quality of the products. Manufacturing these OEM products is not easy, since they require large facilities and a large investment of money. By turning to another manufacturer, all these costs can be saved.
The main downside to this seems pretty obvious, imagine Qualcomm has a big problem and can't offer enough processors to smartphone makers. The great dependence of all of them on Qualcomm would reduce the availability of smartphones a lot.