Meaning – The term OEM, or original equipment manufacturer, refers to a company whose goods are used as components in the products of another company, which then sells the finished item to users.
An original equipment manufacturer (OEM) provides the components in another company’s product, working closely with the seller of the finished product, known as the value-added reseller (VAR).
VARs and OEMs work together. OEMs make sub-assembly parts to sell to VARs. Although some OEMs do make complete items for a VAR to market, they usually don’t play much of a direct role in determining the finished product.
Traditionally, OEMs focused on business-to-business sales, while VARs marketed to the public or other end users. As of early 2019, an increasing number of OEMs are selling their parts or services directly to consumers.
Example of usage – “A common example might be the relationship between an OEM of individual electronic components and a company such as Sony or Samsung that assembles those parts in making their HDTVs.”