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OEM stands for Original Equipment Manufacturer. In the computer industry, an OEM is a company that builds component parts or software that are sold to another company, which then includes them in its own branded, finished product. For example, a computer brand like HP or Dell is a Value-Added Reseller (VAR). They will purchase computer processors from an OEM like Intel and hard drives from an OEM like Seagate to assemble into their final PC, which they sell to consumers. The average customer is typically unaware of the specific OEMs that provided the internal components. OEM products vs. retail products You are most likely to encounter the term "OEM" when shopping for parts or software, especially when comparing them to retail versions.

Hardware

When building or repairing a computer, you can buy OEM components directly from suppliers. While often cheaper, they have fewer frills. The actual components are often identical to their retail counterparts, but some high-performance versions may be reserved for retail sale.

Software

Most commonly, this refers to an OEM version of an operating system like Microsoft Windows, which comes pre-installed on a new PC.

Licensing: An OEM license is permanently tied to the motherboard of the computer on which it was first activated.

Transferability: The license cannot be transferred to a new computer. If you replace your motherboard, you may need a new license.

Price: Due to licensing restrictions, OEM operating systems are significantly cheaper than full retail versions.