As technology and manufacturing products advance on our modern world turning an idea into a finished product can often become a challenging task.
Take a look around you; we’re all surrounded by thousands of products from various manufacturers. It may be different products, all unrelated, but they are distinguished by one factor — they can either be categorised as an OEM or ODM.
OEM (Original Equipment Manufacturer): This means that the manufacturer is a builder of the product from scratch as per their own design and specifications. These kinds of products are typically sold to another distribution company — often a parent company — which handles the sales and the distribution of the product.
ODM (Original Design Manufacturer): These manufacturers design and builds the said product according to the specification required by the other non-parent company. ODMs usually take the cost of building and designing the product.
OEM vs ODM
- As a buyer of OEM products, you are the sole owner of the intellectual property of the product meanwhile ODM manufacturers own the intellectual property rights to the products they produced even after you’ve paid for them.
- ODM products are faster to get to market than their OEM counterparts.
- OEM manufacturers can produce intricate designs and unique specification as required by the buyer. On the other hand, ODM cannot match their level of production complexity.
- OEM manufacturers can produce a unique product which will also be harder to copy by others. ODM cannot as they often make generic products for mass supply.
- OEM products are expensive, risky to produce and takes longer to get to the market as it needs to be tested extensively. ODM’s are cheaper, and best suited for mass production.
Each has its own benefits. OEM’s are suited for manufacturers who have money to perfect their product while ODM’s are attractive to smaller manufacturers who wish to bring a product to serve a particular need in their distribution region or at a lower price.
Apple: OEM or ODM?
Apple is a prime example of an OEM buyer. It relies on its workhorse Foxconn(OEM) to bring their designs to reality. Now you can understand how Apple manages to bring out some quality and innovative products to the masses and also you might now know why it’s so expensive.
Micromax can be taken as an example for an ODM buyer as they have done with their ‘Dual 5’ smartphone, which is a rebranded device from a company called Qiku.