Business Models in the Software Industry


In an OEM scenario  the software vendor provides OEM software to the software partner. The software partner sells the OEM software as part of his solution. Usually, the software partner charges no price for the OEM software, but for his own solution. This is the key difference between OEM and resell.

The software vendor delivers the OEM software to the partner, which pays a license fee and maintenance fee to the software vendor. The license fee for the OEM might be a share of the revenue of the partner product containing the OEM software. Or it might be a constant fee that applies per copy of the OEM software shipped to the customer.

Business Model Canvas for OEM software

In a generic view, the value proposition of outbound OEM for a customer (software vendor) is that the customer saves development cost and time and gets a quality product.

For customer segments, this business model is generally limited to software vendors but might also apply to hardware vendors shipping hardware with embedded software. Based on the specific functionality of the OEM software, it might be further limited to specific software vendors. Customer relationships to software vendors using the software are important. As a consequence, the network of partner companies is the main channel.


More details and background information can be found in these books:

Profit from Software Ecosystems

Title: Profit from software ecosystems


ISBN: 3842300514

Mergers and Acquisitions in the Software Industry

Title: Mergers and Acquisitions in the software industry - Foundations of due diligence


ISBN: 3732243818

(c) Dr. Karl Popp 2017, 2018