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OEM, sweet OEM

OEM, sweet OEM

When the term OEM was first applied to the computer industry, original equipment manufacturers (OEMS) supplied "standard parts" which, when assembled, became a computer.

Back then vendors would closely guard their arrangements with a third-party so competitive advantage wouldn't be lost.

An "OEM arrangement" suggested a veil of secrecy about the operation. As it became more widely understood that specialist manufacturers of disk drives, monitors and later, mother- boards held brand values of their own, such arrangements were made public.

Today the term OEM is used to describe a spectrum of businesses which assemble computers and bundle them with software for either distribution or direct sale. Component vendors or distributors supply products to OEMs that have no use on their own, but which, when put together, comprise a computer.

An OEM is often an assembler . . .

Electronic Resources Australia (ERA) distributes Intel, Quantum, Microsoft, Iomega and Hyundai products to OEMs, dealers and resellers. ERA marketing executive, Stephen Teh told ARN: "We define OEMs as companies that assemble PCs under their own brand name, and included in this definition would be system assemblers.

"There are two types of OEMs: those who piece together systems with their own brand, and those who assemble systems with the purpose of selling to a company who will then use their own brand on them."

Some computer assemblers or manufacturers supply complete systems on an OEM basis where the reseller badges and bundles, or adds value in some other way.

Over time the term OEM has taken on different definitions - it's been used to describe a version of a product, and to describe the process of supplying a product with a third-party brand.

For some, OEM refers to the process of either bundling products or including them with the sale of a system. An OEM version of some software is intended only for sale with a new computer. There are differences between the retail and OEM versions such as packaging. For instance, Microsoft has only ever sold the original version of Windows 95 as a retail pack, yet assemblers have received a number of newer versions in white-box format.

Those in the distribution channel who are described as OEMs or whose activities include OEM, may also be resellers, distributors or vendors.

A reseller might also supply products to specialist software consultants on an OEM basis. Similarly, a substantial part of a distributor's business is with value added resellers. Some vendors, especially of software, have sales and service structures devoted to OEM.

Like many areas of the computer and communications business, OEM is a moving target.

Australian Reseller News defines the OEM sector as those in the channel that are con-cerned with the movement of software and sub-assemblies, which are for the purpose of assembling and bundling systems. These systems may be supplied for rebadging by a distributor or reseller. The important issues for OEMs are often different to classic distributors. Policies are made for OEMs by some software vendors..

This section is devoted to the OEM movers. It is intended to be a forum to report, analyse and discuss issues of interest and importance to those for whom OEM means something . . . you know who you are.

Microsoft complies on IE

by Margret Johnston and Tom Allen

Microsoft has agreed to comply with a Federal judge's order to offer computer manufacturers versions of Windows 95 that have no direct access to Internet Explorer (IE). However, a company executive said most vendors will reject those options and choose a version of the operating system fully equipped with the browser.

In the agreement reached between Microsoft and the Department of Justice (DoJ), Microsoft said it would offer computer makers two new licensing options for Windows 95.

One option is a version of Windows with the IE icon removed, and the operating system modified to reflect the same changes that would be made if a user ran the Add/Remove utility to delete some IE-related files and access to IE. This option impairs some Internet access features of Windows 95, the company said.

The other option is a version of Windows with the IE icon removed from the desktop, and the start program and means of accessing IE removed by hiding a small "stub" file - IEEXPLORE.EXE.

In both cases the code that comprises Internet Explorer would remain in the operating system and there would still be ways for users who buy either version to activate the browser, officials said.

In addition, manufacturers will still have the option to license Windows 95 with Internet Explorer fully operational, which is the option that Microsoft officials said would be the overwhelming choice.

Bob Herbold, chief operating officer of Microsoft, said the company was "elated" to get past arguments over the temporary injunction and refocus attention on the larger question: is it violating a 1995 antitrust consent decree it reached with the DoJ that bars it from tying its operating system to other Microsoft products?

"The real issue central to the lawsuit is whether software companies can continue to improve their products and add features that customers expect," Herbold said.

Over the next few months ARN's OEM section will report on a number of areas such as motherboards, cases, monitors, software and so on. We invite suppliers, assemblers and resellers to inform us of areas they think are important.

For further details please contact the editor of OEM, Tom Allen, at tom_allen@idg.com.au or phone (02) 9902 2770.


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