An OEM is a manufacturer that designs the product based on client specifications. The relationship between the OEM and the customer is that of a typical buyer and manufacturer. The only difference is that the product will be finally marketed with the buyer’s logo. Outsourcing the project to OEM helps companies save on their product development and production expenses. The clients may possess product designs, but they may not have manufacturing expertise, which OEMs take care of.
OEMs can design components or sub-systems. They can allow other companies to use the product. Microsoft is the perfect example of OEM that specializes in Windows Operating System. This system is used by many technology and hardware companies like Acer, Dell, and HP. Another brilliant example of OEM is Foxconn, which works as the manufacturing partner of Apple. The latter is known for its innovative products, and there is a large R&D department to back up their innovation. However, Apple has no manufacturing facilities, so it works with Foxconn to build the products. It works with many other OEMs to build components, which are sent to Foxconn for the final product assembly.
Many original equipment manufacturers (OEMs) possess intellectual property rights to their products. Nowadays, many OEMs outsource their workload to other manufacturers.