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Original equipment manufacturer
An original equipment manufacturer (frequently abbreviated OEM) is a company that builds components that are used in systems sold by a value-added reseller, or VAR. The practice of a VAR selling products with components from OEMs is common in the electronics and computer industry. An OEM will typically build to order based on designs of the VAR.
In common usage, a VAR is sometimes called an OEM, despite this being a complete reversal of the literal meaning of both terms. This misunderstanding arises from use of the term OEM as a verb. For example, a VAR might say that they are going to OEM a new product, meaning they are going to offer a new product based on components from an OEM.
In recent years, some OEM's have also taken on a larger role in the design of the product they are manufacturing. The term original design manufacturer (ODM) is used to describe companies that design and manufacture a product that is then sold under other brand names.
OEM, when used to describe software, is used to differentiate that version of the software which is bundled with other hardware or software from that same software package sold on its own as a retail package. The packaging and legal rights that come with the OEM versions of a software package generally differ from what is provided with the retail versions, though the functionality of the software tends to be the same.
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