Using OEM vs. Retail Parts for Your PC

OEM Software and Drive

Lifewire / Mark Kyrnin

While many consumers may not be familiar with what an OEM or Original Equipment Manufacturer product is, they are becoming more and more common. This is particularly true due to the rise in online shopping. This brief article takes a look at what these OEM products are, their differences with retail products and try to answer if they are things consumers should or should not buy.

What it Means to Be an OEM Product

To put an OEM product in the simplest terms, it is a product from a manufacturer that is sold without the retail packaging to system integrators and retailers for purchase in or with a completed computer system. Often they are sold in larger lots or groups to help reduce the costs to the company using the parts for integration. What the OEM product will come with will vary depending upon the type of product being sold.

So, how does the product vary? Typically the component that is purchased as an OEM product lacks all retail packaging. Also missing might be cables or software that may have been included with the retail version. Finally, there may be no or reduced instructions included with the OEM version of the product.

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 with it 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 this will be referred to as a "bare drive."

Retail vs. OEM

Since price is such a huge factor in the purchase of a product by consumers, OEM products offer a major advantage over a retail product. The reduced items and packaging can drastically reduce the cost of a computer component over a retail version. This leads to the question as to why anyone would choose to purchase the retail version.

The biggest difference between a retail and OEM product is how warranties and returns are handled. Most retail products come with very well defined terms for service and support in case the product has any problems. OEM products, on the other hand, will generally have different warranties and limited support. The reason is that the OEM product is supposed to be sold as part of a package via 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.

As a user who is building a computer system or upgrading a computer system, the retail version may also be important. 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.

OEM Software

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 this will be seen 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 will 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. Be careful though, a number of 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

When shopping for computer components, sometimes it may not be obvious if the item is an OEM or a retail version. Most reputable retailers will list the product as either OEM or bare drive. Other items to look for would be 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 bother you, purchase the retail versions for the peace of mind they provide.