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The curious relationship between OEMs and vendors

The curious relationship between OEMs and vendors

All computers - and all storage systems - are built from parts that come from numerous manufacturers. In almost all cases, the users don't know who the original manufacturers are, and in almost all cases, there is no reason why they should.

Perhaps curiously, a company that assembles other vendors' parts within its own offerings is called an original equipment manufacturer. Decisions whether to build internally or go the OEM route are strictly business: a company decides to resell another manufacturer's products under its own name because the manufacturer has some intellectual property, manufacturing capability or other competence that enables the company to get products out the door faster, cheaper or better.

For example, nobody builds all the components of the storage units they sell; they turn to other manufacturers for the disk drives, connectors and much of the silicon inside.

In many cases, OEM-ing means taking a whole machine from a third party, rebranding it, and selling it as your own. Sometimes the OEM adds value in software or additional hardware, or perhaps it simply resells the box as a way to fill out its product line. And sometimes companies compete against one another with machines that come from the same manufacturer.

When it comes to storage, which companies sleep together is an interesting menage a beaucoup. Here is some of what goes on, at least at the system level.

Sun and HP get their high-end systems from Hitachi. Dell gets its best systems from EMC (the Clariion line). StorageTek, IBM and others get many of their storage devices from Engenio (formerly LSI Logic, formerly Symbios Logic, formerly NCR Microelectronics etc.) Sun gets its 3000 series from Dot Hill. EMC has some of its systems built (and in some cases, designed) by third parties. The list is actually far more extensive than what I show here.

If you follow the market, you see some interesting spinoff resulting from this.

For example, a number of vendors that sell directly to the public but also supply these larger companies find themselves in the curious position of competing in the marketplace against products they have built themselves.

Another curiosity of the OEM world is that some companies produce products that are good enough that even the top-rank storage companies resell them. However, because their name doesn't go on the outside of the box, these companies also remain relative unknowns even though their products may be all over the market (Engenio and FalconStor are good examples of this, although Engenio's penchant for changing its name certainly also contributes to this).

When you add to this the fact that many contracts between OEMs and their suppliers don't even permit the original vendor to claim publicly a relationship with the selling company, it is easy to understand what a challenge it can be for them to gain "brand equity"; they often remain very low-profile as far as the general public is concerned.

Interestingly, OEM relationships are typically not small companies going to larger companies to get some specific technology they couldn't do themselves, but just the opposite. Most often, the relationship is one of a larger manufacturer turning to some smaller (perhaps niche) player that has come up with key expertise.

All of this is quite healthy because it gives large vendors additional ways of acquiring intellectual property without building it in-house, and it gives the smaller companies a better way to distribute their wares.

Which is not to advocate sleeping around of course, but in this special case, it seems to have lots of positive effect.


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