OEM – Original Equipment Manufacturer

In the context of computer software, an OEM is a company that resells a third party software product as its own branded product. When applied to software, it is a confusing term, because (1)the OEM does not create the original software, (2)it does not refer to hardware (equipment) but software, and (3)it is not manufactured, but written.

Semantics aside, an OEM solution is appealing to software vendors for several reasons. It can be deployed in production faster than building the functionality in-house. It is often white-labeled, and so can be embedded seamlessly inside the OEM’s software product. Licensing costs for OEM software are usually priced to align with the software product, allowing for maximum return on investment. And OEM software usually comes with existing documentation, training materials and a knowledge base.