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What's the difference between an OEM and an ODM?

What's the difference between an OEM and an ODM?

On the American Megatrends website (AMI.com), you will frequently see the use of 'OEM' and 'ODM'.

OEM stands for Original Equipment Manufacturer, while ODM stands for Original Design Manufacturer. Some will tell you that an OEM just makes peripherals and parts for computers and servers. Others, will state that an OEM doesn't design anything and simply manufactures the system according to their customer's design requirements. Most concur that an ODM builds and designs complete systems for others.

While definitions vary widely, American Megatrends refers to an OEM as a company that sells branded computers and servers. An ODM builds computers, servers and electronic devices for various OEMs.

For example, in ZDNet's January 2015 report, 'How the three biggest PC OEMs are facing an uncertain future', the OEMs are Lenovo, HP and Dell. In the DigiTimes article from April 2017, 'Digitimes Research: Top-5 notebook vendors see 6% on-year growth in April shipments', the ODMs mentioned are Quanta and Compal. The same three OEMs are mentioned again as Dell, HP and Lenovo.

An interesting note, since 2016, many IDC reports now include an 'ODM Direct Group', which refers to sales from ODMs that directly compete against OEMs. Our industry is very fluid. Things change while others mesh. Lines are blurry and will become more so when you start seeing companies that typically do not compete, compete. Imagine a world where OEMs compete directly with data center giants for the same customers. It's started.

More and more, you will begin to see a new ODM, called 'China ODM'. China ODMs are smaller ODMs that can handle overflow from other ODMs, shorter runs and so on. Perform an Internet search for China ODM and you will discover thousands of listings. Many China ODMs are perfect for manufacturing crowdfunded projects. They can help select a firmware and platform, customize, test and manufacture it. With security being the top concern for many OEMs, selecting the right firmware is important. I'm biased about BIOS and BMC firmware. I will always suggest Aptio BIOS and MegaRAC BMC firmware.

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