ODM

What Is ODM? ODM is the abbreviation of Original Design Manufacturer in English. It refers to the production method in which the purchaser entrusts the manufacturer to provide all services from R&D, design to production and post-maintenance, and the purchaser is responsible for sales. The purchaser usually also authorizes its brand, allowing the manufacturer to produce products with that brand.

Original design manufacturer is a production method in which the purchaser entrusts the manufacturer to provide all services from research and development, design to production, and post-maintenance, and the purchaser is responsible for the sales. The purchaser usually also authorizes its brand, allowing the manufacturer to produce products with that brand.

After a manufacturer designs a product, in some cases it may be favored by manufacturers of other brands, requiring the latter’s brand name to be used for production, or slightly modifying some designs (such as button positions) To produce. The biggest advantage of this is that other manufacturers reduce their own development time. Some people also habitually call these products OEM, but in fact they should be called ODM (Original Design Manufacturer).

ODM
ODM

ODM Implementation Method

The product solution designed by the ODM manufacturer can be provided to the brand owner in a buy-out or non-buy-out manner:

Buyout method: The brand owner buys out the design of a certain model product that the ODM manufacturer has ready, or the brand owner separately requires the ODM manufacturer to design a product plan for itself.

Non-buyout method: The brand owner does not buy out the design of a certain model of ODM manufacturer, and ODM manufacturer can sell the design of the same model product to other brands at the same time without buying out. When these two or more brands share a design, the difference between the products of the two brands is mainly in appearance.

Advantages of ODM

While the global electronics industry is considering survival issues, a rapidly growing new force is active in China’s Taiwan and mainland China. Analysts call them ODMs, or “original design manufacturers.” When the discussion on EMS (Electronics Manufacturing Service) has not cooled down, people have turned their attention to ODM again.

As the name suggests, ODM not only provides OEM services for manufacturing, but also provides multiple design solutions for components or complete machines. These designs are usually off-the-shelf, and the appearance, component selection, production process flow and small batch trial production tests have been completed. OEM customers can choose the design plan at will, and then put into mass production immediately. The electronic manufacturing service provider (OEM) usually conducts OEM production according to the design provided by the customer.

“Due to the global economic slowdown, OEMs have performed poorly in the past two years, but we are still growing. Our mobile phone sales increased by 50% in 2001 and almost doubled in 2002. Taiwan [ODM] in the next five years Manufacturers’ mobile phones will account for 50% to 60% of the world’s total,” said Irwin Chen, general manager of the wireless business department of Taiwanese ODM manufacturer BenQ.

In fact, mobile phone production is just a small piece of new field opened up by ODM manufacturers. According to a report by Chris Whitmore, an analyst at the U.S. branch of Deutsche Bank Securities, notebook computers produced by ODM account for nearly 60% of the world’s share and are expected to grow to 80% by 2004.

The right time, place, and right people have created the success of ODM. Looking at some data at will, you will find that ODM manufacturers have distinct characteristics: the top ten ODMs in the annual output value are all Taiwanese manufacturers, with computers and peripherals as their main products. In recent years, they have changed their production bases from Taiwan moved to mainland China.

First of all, Taiwan has a complete PC industry group, enabling ODM manufacturers to obtain low-cost components and parts supply. Years of reform and opening up have made China an ideal low-cost manufacturing base, while Taiwanese manufacturers have the same roots and the same origin as the mainland, and are naturally close to the water, thus further gaining a low-cost advantage. At this time, when the global IT market is declining, OEMs are forced to seek outsourcing to reduce costs, investment scale and risks. Taiwanese businessmen with a wide presence in mainland China have naturally become the first choice. On the other hand, relative to the rapid development of the market, Chinese local OEM manufacturers lack design capabilities and production experience, so they have to find ODM manufacturers. Taiwanese manufacturers who communicate with the mainland have become the best partners.

Taking advantage of China’s low-cost advantages, these Taiwanese ODM manufacturers have almost taken over the production of global desktop computer components and even complete computers, and they also accounted for half of the notebook computers. In fact, some famous brand OEM manufacturers such as IBM, Dell, HP, Sony, Ericsson, NEC, Motorola, etc. have entrusted ODMs such as BenQ, Compal, GVC, Quanta, Volkswagen and others for the parts or complete machines of products such as computers and mobile phones. Produced by the manufacturer. According to the data of IDC of the United States, the annual output value of ODM reached 15.7 billion U.S. dollars in 2001, and about 22.5 billion U.S. dollars in 2002. It is predicted that it will reach 27.9 billion US dollars in 2006, with a compound annual growth rate of between 10% and 20%.

One of the advantages of  ODM is to seize the commanding heights of “scheme design”. In an industrial chain, the link where the bottleneck effect occurs will become the commanding heights. Enterprises that seize this link will have special advantages and obtain the highest profits. From the manufacturing industry, including surface mount (SMT) technology, the assembly and production process of electronic products is basically mature and has become a business with a lower threshold, and design has become a major factor affecting competitiveness. The functions and structures of electronic products are becoming more and more complex, the indicators are becoming more demanding, and the design cycle has an increasing proportion of the time to market. ODM takes over the design process and uses its advantages in the PC field to provide customers with various ready-made solutions, which minimizes the time to market for customers’ products. Today, when electronic products are being updated so quickly, the ODM model naturally comes in time.

ODM foundry products have expanded from original computer products to mobile phones, servers, PDAs, network equipment and other fields. For example, Quanta, Taiwan’s largest notebook computer manufacturer, is actively penetrating the wireless communications market, producing mobile phones for Siemens and Panasonic. And Taiwan Huayu Computer Company also snatched a mobile phone contract from Sony Ericsson Mobile Communications last year. Although ODM still needs to overcome some technical difficulties in these fields, after the design and production technology of these products mature in the next few years, ODM may once again achieve outstanding performance in these new markets.

However, as a contractor whose main business is manufacturing, ODM can also provide a variety of design solutions with one condition, that is, the market scale, technology maturity level and standard popularity of the target product must reach a certain level, and the products on the market are relatively homogeneous.化. The system design of this type of product is not difficult and has universal applicability. For example, in the PC field where ODM is good at, all devices or components comply with the WINTEL architecture, and the design of the PC has been reduced to a similar building block game. The GSM mobile phone products that ODM is attacking also have such characteristics. In areas where other standards have not yet been unified, ODM seems difficult to replace the design experts of professional OEM manufacturers.

The difference between ODM and OEM

The main difference between OEM and ODM is that OEM is the client who proposes the product design plan. No matter who completes the overall design, the client must not provide a third party with products that adopt the design; while ODM is produced from design to production The party will complete it by itself and buy it after the product is OEM. Whether the manufacturer can produce the same product for a third party depends on whether the OEM can buy out the design plan. To put it bluntly, the difference between OEM and ODM lies in who owns the intellectual property rights of the product. If the client enjoys the intellectual property rights of the product, it is OEM, which is commonly known as “foundry”; The overall design carried out is ODM. For example, some Japanese brand notebook computers are actually produced by Taiwanese manufacturers. Afterwards, Taiwanese notebook computer manufacturers only need to modify certain design details or accessories to mass-produce under their own brand names. The reason is that they do ODM rather than OEM for these Japanese brands. Of course, we can say that they are all produced from the same production line. The biggest difference between OEM and ODM is not only the name. OEM products are tailor-made for brand manufacturers, and can only use the brand name after production, and absolutely cannot be produced under the name of the manufacturer. The ODM depends on whether the brand company has bought out the copyright of the product. If not, the manufacturer has the right to organize production on its own, as long as there is no corporate design identification.

The term OEM is simply too common in computer hardware products, such as OEM optical drives, OEM monitors, and OEM mice. Some people even think it is a quality-assured brand. So, how much do you know about OEM? Does it mean that a product is OEM?

In fact, OEM has a close relationship with modern industrial society. Some well-known brand-name commodity manufacturers often turn to other manufacturers for help because their factories cannot meet the requirements for mass production, or they need certain parts. These vendors who lend a hand are called OEMs (Original Equipment Manufacturers). If it is extended to the IT field, it means those manufacturers that carry out foundry. For example, CPU fans are not produced by Intel or AMD. They usually find professional motor manufacturers like Sanyo Corporation for fan OEM production.

What about ODM? For example, some Japanese brand notebook computers are actually produced by Taiwanese manufacturers. Afterwards, Taiwanese notebook computer manufacturers only need to modify certain design details or accessories to mass-produce under their own brand names. The reason is that they do ODM rather than OEM for these Japanese brands. Of course, we can say that they are all produced from the same production line.

The biggest difference between OEM and ODM is not only the name. OEM products are tailor-made for brand manufacturers, and can only use the brand name after production, and absolutely cannot be produced under the name of the manufacturer. The ODM depends on whether the brand company has bought out the copyright of the product. If not, the manufacturer has the right to organize production on its own, as long as there is no corporate design identification.

In industrial society, OEM and ODM are commonplace. Because of the consideration of manufacturing cost, transportation convenience, and saving development time, well-known brand companies are generally willing to find other manufacturers for OEM or ODM. When looking for other companies for OEM or ODM, well-known brand companies have to bear a lot of responsibilities. After all, the product is crowned by its own brand. If the quality of the product is not good, at least some customers will come to the door to make a complaint, and if it is serious, it may have to go to court. Therefore, brand companies will definitely carry out strict quality control during the entrusted processing period. But after the foundry is over, the quality cannot be guaranteed. Therefore, when some businesses tell you that the manufacturer of a product is an OEM or ODM product of a major brand, never believe that its quality is equivalent to that brand. The only thing you can believe is that this manufacturer has a certain production capacity.