Using OEM vs. Retail Parts for Your PC

The packaging and warranty, not the component, is what differs

An Original Equipment Manufacturer product sources from the manufacturer that designed it and is sold without retail packaging to other companies for use in assembly and integration during some other product's lifecycle. Typically, OEM products sell in large lots as part of a wholesale or bulk purchase.

A good example of these differences can be seen between an OEM and retail hard drive. The retail version is often referred to as a kit because it includes the drive cables, installation instructions, warranty cards and any software packages used to help configure or run the drive. The OEM version of the drive will only include the hard drive in a sealed anti-static bag with no other materials. Sometimes it'll be referred to as a "bare drive."

OEM vs Retail

Difference Between Retail and OEM Hardware

  • Cheaper.

  • Limited warranties and service/support.

  • Better warranty terms.

  • Longer and more reliable warranties and support.

OEM products offer a major price advantage over a retail product. The reduced items and packaging can drastically reduce the cost of a computer component over a retail version. However, another major (and countervailing!) difference between a retail and OEM product is how warranties and returns are handled.

Most retail products come with well-defined terms for service and support. OEM products, on the other hand, will generally offer different warranties and limited support because the OEM product is supposed to be sold as part of a package through a retailer. Therefore, all service and support for the component in the system should be handled by the retailer if sold in a complete system. The warranty differences are becoming less defined now, though. In some cases, the OEM drive may actually have a longer warranty than the retail version.

When you build or upgrading a computer system, the retail version may also be more helpful. If you are unfamiliar with what is required to install the component into the computer system, the manufacturer instructions can be very useful as are any cables that you may not have from other components for the PC.

Difference Between Retail and OEM Software

  • Lacks retail packaging.

  • Typically comes with PC.

  • Higher tendency to be pirated.

  • Can be bought separately of any hardware.

  • Tends to be higher priced.

Like hardware, software can be purchased as OEM. OEM software is identical to the full retail versions of the software but it lacks any packaging. Typically you'll see the difference with software items such as operating systems and office suites. Unlike OEM hardware, there are more restrictions on what will allow the software to be sold by a retailer to a consumer.

OEM software typically can only be purchased with a complete computer system. Some retailers allow the purchase of the software if it is also purchased with some form of core computer system hardware. In either case, there must be some additional purchase of hardware to go along with the OEM software.

Several unscrupulous retailers and individuals sell OEM software that is actually pirated software, so check the retailer before purchasing.

Microsoft has reduced the restrictions on buying their OEM operating system software over the years such that it does not have to be tied to a hardware purchase. Instead, they have changed the licensing terms and support of the software. For instance, the System Builder versions of Windows are tied specifically to the hardware it is installed in. This means that dramatically upgrading the hardware of the PC may cause the software to stop functioning. In addition, the System Builder software does not come with any Microsoft support for the OS. This means that if you encounter problems, you are pretty much on your own.

Determining OEM or Retail

Most reputable retailers will list the product as either OEM or bare drive in the product description. Items such as packaging and warranty can provide clues as to whether it is an OEM version.

The biggest problem comes with the various pricing engines on the web. If a manufacturer uses the same product designation for an OEM and retail product, it is possible that retailers on the results page could be offering either version. Some pricing engines will list OEM next to the price, but others may not. Always read the product description if you are not sure.

Are OEM Products OK?

There should be no physical difference in a component if it is sold as OEM or in retail. The difference is the extras that are provided with the retail version. If you are comfortable with the terms of the OEM product compared to the retail version, then it is generally better to buy the OEM product for the reduced cost. If items such as product warranties matter to you, purchase the retail versions for the peace of mind they provide.