OEM generally means "original equipment manufacturer." It is also referred to as "bulk packed", "white box", "brown box" and "gray market." Almost all PC component and software vendors make at least two versions of the same product based on a difference in the distribution channels. Retail is the main consumer channel, whilst OEM to various systems manufacturers is another. The OEM products are of the same quality as their retail counterparts.

Microsoft, for example, markets its operating system software in the retail market, but also makes OEM versions available to computer manufacturers, such as Dell, who bundle the software with their products and assume the costs of end user support. OEM versions are substantially less expensive in many cases.

The retail channel typically uses colourful retail boxed products, with installation manuals, software CDs etc. The “OEM” version may consist of preinstalled software with a single piece of media and software, or online manuals.

There are important differences which can affect the claims management process. With regard to software, OEM licenses typically terminate with the loss of a system. That is to say, OEM software installed on a system cannot be transferred to a different system and must be part of the replacement if the system is stolen or damaged.

In addition to packaging and pricing, there are sometimes other differences between the retail and OEM versions of a product. Here are a few examples.

While OEM hardware components usually come with the same warranty as retail boxes, hard drives are a notable exception. Retail boxed hard drives often come with a longer warranty from the manufacturer, while the warranty of OEM drives is the responsibility of the reseller. Many computer systems manufacturers (e.g. IBM, Dell, HP) will only warranty drives installed in their systems if the drives have their OEM part numbers. Sometimes the retail version of a hardware device comes with bundled applications software, whereas the OEM version may not. This is especially true for high-end video, audio cards and certain optical media devices.

To summarize, the OEM vs. retail distinction can have a substantial effect on the settlement of a claim in terms of cost, availability, warranty and user support. Thus, the adjuster should take care to differentiate the way in which the product was acquired in considering sources and costs for indemnification.