The world is not nearly as simple as some people may think it is. When you buy a new iPhone or MacBook, are you really buying an “Apple” product? The fact of the matter is that several companies have to collaborate to get that smartphone in your hands. One might make the screen, another might make the processor, yet another makes the software, and yet one more puts it all together. That’s why there are so many OEM and ODM companies in Taiwan, China and other countries that specialize in this kind of business.
But what is the difference between an OEM and an ODM? From the perspective of the typical consumer, the distinction isn’t all that important, but it is something that is worth knowing. This way, if you ever find yourself in a conversation with someone else about automobiles, technology, electronics, or nearly anything else, you’ll use OEM when it’s appropriate and ODM when it’s appropriate.
OEM stands for Original Equipment Manufacturing (or Original Equipment Manufacturer). An OEM company will build a product according to its own specifications and then sell that product to other companies that can then brand it however they’d like. One of my first smartphones with a T-Mobile MDA. It was pretty much the exact same phone as the Cingular 8125, because both phones were really just based on the HTC Wizard platform. This was before HTC really started to develop its own brand as a consumer electronics company.
HTC made the smartphone under its own specifications and using its own design, subsequently taking orders from T-Mobile and Cingular to build these same smartphones for them. This is in the case of a final product, but OEMs also make components and parts. A Dell laptop might use Kingston RAM modules, for example.
In the case of cars, you might hear someone refer to “OEM tires.” This refers to the tires that originally come equipped with that specific new car when it first rolls off the lot. If you go to a tire store and ask for the OEM replacement, they can get you the exact same tire (if it is still available). You might also hear about “OEM replacement” parts, which are meant to be equivalent to the original equipment parts that came with the car. This is in contrast to more budget-oriented parts or more performance-oriented parts that differ from the original equipment.
ODM stands for Original Design Manufacturing (or Original Design Manufacturer). The key difference here is that an ODM isn’t developing and building its own unique designs and products. Instead, it has been hired by another company to design and build the product according to the customer’s specifications. In this way, you could think of an ODM almost like a freelance manufacturer, working within the requests and needs of each individual client.
Going back to smartphones, the iPhone is a good example of this. While the iPhone uses several components from multiple OEM companies, they’re ultimately put together at the Foxconn factory into a final product. In this way, Foxconn is acting as an ODM, because it is building the iPhone according to the specific demands of Apple.
There is no such thing (at least there shouldn’t be) as a generic “Foxconn iPhone” that can then be sold to other cell phone companies. By contrast, some of the OEM components inside the iPhone–like the Bluetooth module–can be sold to other companies.
Do you have a suggestion for a future Grammar 101 topic? Let me know through the comment section below. 🙂
I’ve gotta be completely honest, this is the first time I’ve seen the term ODM. Worth knowing, though.
With regards to OEMs, I usually see that used in relation to companies like HP and Lenovo: PC manufacturers. I’m not exactly sure how that works, though. They brand their devices themselves as far as I can tell. Is it because they then sell them to companies like Harris Technology and Dick Smith?
HP isn’t an OEM, as far as I know, because they don’t actually manufacture their own products. Although Lenovo has its own brand, I believe it does act as an OEM for some other companies, just as Samsung is an OEM for things like flash memory and LCD panels.