How exactly does one define Original Equipment Manufacturer?
There are some companies that do not make all the parts of whatever final product they are producing and it would be the original equipment manufacturer company that produces these parts for them. 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. Original equipment manufacturers create custom made parts for their clients and the effect of this kind of service would be an increase in selling price of the final product because nothing custom made ever comes cheap.
The best example to be given for this kind of relationship between two companies would be that of an auto company that orders car parts from another company. There is a wide variety of car parts that original equipment manufacturer custom made for reputable companies. All the OEM would have to do is create the custom made parts and send them to the automobile company where these parts are then assembled into a car. It cannot be denied that the more original equipment manufacturers are involved in make car components, the more the car becomes expensive.
However, this definition of OEM is now somewhat obsolete today because the computer industry, an industry that is getting bigger and bigger at a faster rate than any other company, has made a new definition for these companies. 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. A good example of this would be computer software being made by one company while other companies that sell computers would buy these software, use it in the computers they produce, and then sell them of under one brand name, their very own brand name. Because the buyer of the software is the one that does the rebranding, they would be the company that is considered to be the OEM.
Now let us dig deeper on how the OEM really works.
It cannot be denied that the OEM and the VAR would always be companies that work hand in hand. It is the OEM that helps the VAR make a sale by producing parts for them. The EOMs has specific responsibilities on create parts but they have no say on how the final product will be made.