What is OEM? What is Retail?

Retail is when you purchase something, and it comes in the colorful, pretty box. It comes with everything you need to enjoy. (Pictures, Manuals, Stickers, Tape, Cords, ect.)

OEM is when it comes with the bare bone basics straight from the manufacturer. Hence OEM: Original Equipment Manufacturer.
An OEM hard drive will come with JUST the hard drive. No cables – you will have to supply these yourself. It will also come wrapped in bubble wrap, and then in an anti-microwave bag. No pretty box.
An OEM processor (CPU) will come the same as the hard drive – no thermal compound, no fan. (at least I’m pretty sure no fan – let me know if I’m wrong.)