By Joel Montgomery // 24 October 2008 // Related Categories: Tips

What is OEM?

Wouldn't it be great if you could buy I.T. at prices usually only available to big business? Well maybe OEM is your answer. Manufacturers such as Microsoft negotiate ultra-aggressive prices with computer manufacturers such as Dell on versions of products they call OEM ("Original Equipment Manufacturer"). The price is low because Dell commits to shipping thousands or millions of copies, and their aim is to entice you to buy or try a product at the same time you invest in a new computer. OEM pricing creates an attractive up-sell (e.g. buy a computer and for an extra $200 you can get Vista) and catches you when you have your credit card out. That's why a large majority of all copies of Vista sold worldwide are OEM.

Buying OEM with your computer

If you're looking for a new computer, you'll probably notice that buying software or accessories with your computer is cheaper than if you purchased them all separately. This is most likely because you're buying OEM. A majority of OEM software is pre-installed on a computer, although some come on a CD with your computer, and they range from free trials and cut-down versions to the real deal.

As a small business, there are some things you need to know before buying OEM:

  • You'll definitely save money upfront. The rule of thumb is you can typically buy an OEM product pre-installed or attached to a computer for 30%-50% less than you'd pay if you bought it separately from a retail store.
  • Most OEM software lives and dies with the computer it is pre-installed on. For example, if you have Microsoft XP OEM and you want to upgrade your fleet then you won't be able to simply transfer your OEM license. On the other hand if you purchase the more expensive (aka "full") version of XP you can install it on a new computer providing you uninstall it from the old computer without getting in trouble with Microsoft.
  • OEM versions do not always have all the features of the full versions. Always check if there are any restrictions. OEM security software typically lasts for anywhere between 3 months and 18 months and then you have to upgrade to the full version.
  • Support and warranty options may be restricted on OEM. For example, Microsoft expects the OEM provider (e.g. Dell) to provide support to their customers for OEM versions, however Microsoft agree to offer support direct to Dell's customers for the full version. Sometimes OEM products don't come with warranties and some cannot be returned or upgraded.
  • Most OEM products do not come with a pretty box or a manual. You'll usually find the OEM CD in the box that your computer came in. If you like surfing the web then you can probably find the user manual online, and if anything you're doing your bit for the environment by not purchasing the shrink-wrapped box.

Microsoft's OEM rules are quite restrictive but other OEM products such as accounting software, security software and notebook accessories are usually flexible, with little or no restrictions. I always buy OEM with my new computer purchases as it's a great way to save money. If you're not sure, check with your trusted IT supplier.


Buying OEM separately

When asked, Microsoft says that OEM software must be pre-installed and is not intended to be installed by consumers. However, there are differing opinions as to how well this is policed. Hundreds of OEM software titles flood the market. 

But be careful. If you are thinking of buying OEM separate to your computer purchase make sure you first understand the rules of purchase. Talk to the manufacturer or visit their website. Don't go on what your supplier tells you. Here are some examples of OEM policies:

  • Microsoft has strict rules on OEM. OEM software must be pre-installed and OEM hardware must be distributed with a computer system or another non-Microsoft hardware component. OEM products cannot be purchased separately.
  • Adobe doesn't release OEM versions of Photoshop but you can sometimes find a non-legitimate OEM version for sale on Google. These copies are illegal. On the other hand Adobe Photoshop Elements is available as OEM but must be purchased with hardware (e.g. cameras and scanners).
  • Accounting software manufacturers such as MYOB may allow the purchase of OEM whether or not it is purchased with a computer, providing it's purchased around the same time as a computer. Their rules have varied in the past so I suggest you call them to double-check before you make your OEM purchase.

In most cases I suggest against buying OEM separately, however if you've recently purchased a new computer (e.g. in the last 7 days) and you are thinking about buying an OEM product, then check with the manufacturer first because they may allow it. Remember manufacturers are getting better at verifying the legitimacy of your products through the web, and piracy is a crime.

Please share with us any additional feedback you have on buying OEM.

Comments: 2 // Share:

Sydney Geek // 24/10/2008 5:49 PM

Thanks Joel. This is great.

Craig McGeachie // 25/10/2008 7:42 PM

nice review

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