Whats the matter with OEM products?
Gray Market products, in general, make distributors and product manufacturers nervous. For starters, OEM products are sold to system builders in bulk with the intention that they will be used in pre-built systems. This makes the merchant liable for quality-control. For example, if a bad chip ships, it’s the fault of the system builder, not the manufacturer. The reason why distributors get nervous is because OEM products are usually sold to the system builder directly, and not through a distributor – removing their primary reason to exist. Distributors and manufacturers work in tandem to assure the vendors sell products at or above a predetermined price; this prevents price wars. When system builders sell the chips they bought from the manufacturer on the open market, they don’t necessarily need to adhere to the prices set by the distributor or manufacturer. Removing the distributor from the supply chain can be both a blessing and a curse. Almost all major vendors now have at least some
