OEM vs ODM – What is the Difference [Story Time]

Before diving into OEM vs ODM comparison, we need to understand what these terms exactly mean.

OEM stands for Original Equipment Manufacturer and likewise, ODM stands for Original Design Manufacturer.

But what does it mean an what exactly is the difference between OEM and ODM?

The concept of ODM & OEM is used in the electronics industry and its manufacturing. So, you will typically hear this concept in the context of smartphones and gadgets.

I’ll tell you a fictional story to explain in an easy way.

OEM (Original Equipment Manufacturer)

Apple – Hey OEM, make an iPhone for me. After that, I need to distribute it to my eagerly waiting fanboys.

Foxconn (OEM) – Okay sir. So, how do you want your phone to be? We’ll make an amazing phone as per your requirements. Also, we have some designs ready for you.

Apple – No need. I have designed everything myself. So, just assemble everything as I say. Also, use the best hardware which will be suitable for my design.

Foxconn (OEM) – Don’t worry, Sir. It is our responsibility to convert this paper design into reality.

Therefore, Foxconn made iPhones for Apple and marketing was done under Apple’s brand name.

ODM (Original Design Manufacturer)

(Meanwhile, Micromax goes to China)…

Micromax – Hey Mr. ODM, make the best phone for me. Because I need to display it in India as my own innovation.

Qiku (ODM) – Sure. Where is your design?

Micromax – Ummm… I don’t have any design.

Qiku (ODM) – So what do you want here?

Micromax – See, I need the best phone with 128 GB storage, 4 GB RAM, blah blah blah… So, can you provide me such a phone?

Qiku (ODM) – Yes Sir, we have this brand new Qiku 360 Q5 Plus. Should I pack this for you?

Micromax – Great! Stick my Micromax logo on the backside of your phone. Also, write “Made in India” and my innocent patriotic Indians will surely buy it in the name of Indian phone.

Qiku (ODM) – And what should I name this phone?

Micromax – Umm… Name it “Micromax Dual 5”

(After few days…)

Qiku (ODM) – Here is your brand new phone, Sir. Moreover, we have re-branded your phone completely and gave an Indian touch too.

Micromax – Great. Certainly, I’ll sell this phone at a much higher price and fool Indians that we have made this phone in India. Haha!

OEM vs ODM – The Difference

• OEM makes the phones but doesn’t have any design or rights for that.
• ODM makes the phones, also designs them and has all the rights by itself.

None of the companies can completely make their own spare parts. But at least, designing and manufacturing should be done in our country rather than packaging someone else’s box.

I can list several other rebranded Chino-Indian phones which questions the innovation and patriotism.

Refer: How Indian Smartphone Makers Lost the War Against Chinese Companies – Gadgets360 Report

Why did Indian brands fail?

Excluding a few premium companies, all the Indian local brands generally buy their phones from a Chinese ODM, rename them and sell in India.

Be it Micromax, Karbonn, Spice, Intex, Lava, etc. None of them has a proper R&D network in India. Meanwhile, companies like Apple, Samsung, LG spend millions of dollars on Research and Development.

It is still not wrong to do that but at least provide us with the best value for money. But taxation and importing costs are high.

India is a price-sensitive market and the brands which provide the most value for money products survive here.

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This post was originally written on Quora by Pritesh Pawar: What is the difference between ODM and OEM by Pritesh Pawar

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