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OEM and ODM Explained: What Are the Pros and Cons of Each?
OEM and ODM have become common terms in the business world. There are major differences between these two manufacturing models, but not many people can explain these differences clearly. This article will outline the definitions, advantages and disadvantages of both OEM and ODM business models from the perspective of video calling tools.
What is OEM?
OEM stands for Original Equipment Manufacturer. With this model, companies can use or sell ready-made products made by another company as their own. This allows access to high-quality products without the time or expense needed to produce them.
OEM Advantages
- Access to high-quality products
- Less time needed to release
- Significant reduction in cost
OEM Disadvantages
- Many parts of the product cannot be customized
What is ODM?
OEM stands for Original Design Manufacturer. In this model, companies outsource product development to a third party, allowing bespoke products to be created from scratch before they are brought to market.
ODM Advantages
- Products can be freely customized
ODM Disadvantages
- Requires more time to release
- More expensive than the OEM model
- Since a new system is being created, there is a high possibility of issues occurring in the early stages of development.
Comparison table of OEM and ODM models in video calling tools
We have created a table to help you compare the differences between the OEM and ODM models in video calling tools in more detail.
*"Bellbird," our video calling tool, falls under the OEM category.
| OEM | ODM | |
| Description | A completely pre-made system *If we were to compare it to clothes, it's like choosing from the shirts on a rack. | A system designed specifically for the client *Continuing the clothing analogy, it's like having something tailor made. |
| Time required for system development | About 3 business days | About 180 business days *Following the development scale below |
| Initial development cost | 0 yen | 14,400,000 yen (Assuming development can be done by 3 IT engineers in 6 months) |
| Running Cost | 30,000 yen~ (*Bellbird) | 800,000 yen (Assuming maintenance can be performed by one IT engineer per month) |
| System modification cost | 0 yen | 400,000 yen (Assuming it can be repaired by one IT engineer within half a month) |
| System modification concept | Changes are made if they are likely to be used by multiple clients. | Modify all individual requests |
| Handling of bugs post-release | Since the system is already in operation, bugs/issues have already been addressed. | Since it is a new system, bugs may occur in the early stages, and it takes time and cost to fix them. |
| Advantages | Low cost Quick release to market | Flexible |
| Disadvantages | Inflexible | High cost Take time to release |
Summary
The differences between the OEM and ODM models for video calling tools can be summarized as follows:
■ OEM
Utilizes existing systems that suit the client's purpose
Characteristics: Initial and running costs are low, but there are many parts that cannot be customized for the client.
■ ODM
A new system is created from scratch
Characteristics: Customization is possible, but it requires high initial and running costs in addition to the time needed to release.
Each model has advantages and disadvantages, so it is important to choose the option that suits your budget and purpose.
Our video calling tools are available on an OEM basis and can be released in as little as three days.
For those considering starting a new online lesson business, the following article explains the features of Bellbird's OEM service in more detail.
