Rommel asked the Windows forum why the OEM version of Windows 7 is cheaper than the upgrade version. Both were from the same retailer.
The Original Equipment Manufacturer (OEM) version of a program is intended to come bundled with a computer, not sold as a stand-alone product. Obviously, since established retailers such as TigerDirect openly sell OEM products to consumers, software publishers don't make a big deal about that technicality.
OEM software has its limits. It probably won't come in a pretty box and will almost certainly lack documentation. You can live with those limitations. But it will also probably not include technical support. After all, if the software came with the hardware, the consumer should ask the PC manufacturer for help.
A more serious limitation: OEM software generally can't be moved to another computer. You can move a retail copy of Microsoft Office from one computer to another with no problems--just so long as you uninstall it from the old computer in a timely manner. But with the OEM version, the first computer you install it on is also the last.
Read the original forum discussion.