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Both of them utilize expectation-maximization strategy to converge to a minimum error condition. While K-Medoids require the cluster centters to be centroids, in k-Means the centers could be anywhere in the sample space. k-Medoids is more robust to outliners than k-Means therefore results in more quality clustering. It is also computationally more complex.

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Q: Difference between K-mean and K-medoids algorithm for clustering techniques in data mining?
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