Microsoft: More Evidence That Windows Phone 8 Is A Great Success

| About: Microsoft Corporation (MSFT)

A few months ago we learned that Microsoft's (NASDAQ:MSFT) Windows Phone 8 is the fastest growing OS in the smartphone market. Adding to that just a couple of days ago, PC Magazine gave Windows Phone 8 the "Readers' Choice Award" for 2013. The award is given based on a survey for user satisfaction among smartphone OSes, and in this one Windows Phone 8 was the clear winner.

Let's take a look at this survey and see what we can take and use for our investments.

The Results

In the overall satisfaction score, Windows Phone 8 was almost half a point ahead of Apple's (NASDAQ:AAPL) iOS and almost a whole point ahead of Google's (NASDAQ:GOOG) Android. Furthermore, Windows Phone 8 was equally satisfying to its users regardless of the age of their phone. Both iOS and Android were more satisfying in newer phones.

The following chart provides a look into consumer motives for buying their phone. Here we can see two clear trends, one for Apple and one for Microsoft.

Apple's ecosystem has been a strong competitive advantage since 57% of iPhone users bought their iPhone for this reason. It has also formed a core group of satisfied recurrent buyers.

However, the biggest winner here is clearly Microsoft. With Windows Phone 8 it has obviously met a lot of people's needs and created a loyal user base that consider important to have Windows Phone 8 on their phones. Almost all Windows Phone 8 users stated that the OS played a great part in choosing their phone.

For any new product to go viral, the first step is to build a core fan base that will spread the word about how great the product is and introduce it to the wider audience. Microsoft seems to have accomplished this goal.

Moreover this preference is a great selling point to smartphone OEMs. If people are considering Windows Phone 8 as a motivating factor for buying a phone, every OEM will want to offer at least one model that runs this OS. And the same motivation applies to app developers, creating a virtuous cycle that grows the Windows Phone ecosystem.

Finally, in the following table, we see two metrics that confirm the existence of a core user base for Windows Phone 8. WP8 has the highest score (9.2) in the "Likelihood to Recommend" category and the higher "Netpromoters Score" which measures customer loyalty.

The Methodology

Before we can accept the results of this survey though, we must examine the method that was used. Below is the way PC Mag does this survey every year:

We email survey invitations to community members, specifically subscribers to our Readers' Choice Survey eblast mailing list. The surveys are hosted by Equation Research, which also performs our data collection.

Respondents are asked only to rate products and services that they actually use. The respondents are asked several questions about their overall satisfaction with the products and their reliability, as well as experiences with technical support and repairs within the past 12 months.

In all cases, the overall ratings are not based on averages of other scores in the table; they are based on reader answers to the question, "Overall, how satisfied are you with your device?"

As expected the survey data represent only PC Magazine readers that have subscribed to its mailing list. According to its corporate website this is its users' demographic profile:

PC Mag's readers are tech savvy, have plenty of money to buy the latest gadget and are opinion leaders to friend and family. Essentially these people are trend-setters in the technology world and hearing what they have to say may give us an early warning about emerging trends.

However we should always bear in mind that this is not a scientific survey and we should take its results with more than just a grain of salt.

The Takeaway

Having said that, there are two data points I believe we could safely use.

  • The OS played a great part for those who bought a Windows 8 phone.
  • Almost all of them are likely to recommend it to others.

Microsoft seems to have finally got it right in the smartphone space and has managed to create a core fan base around its Windows Phone 8 OS. This is great news for this company that struggles for many years in the fringe of the smartphone world.

Windows Phone 8 seems to be a success further promoting Microsoft's push for a universal platform across all devices. Microsoft's moat is definitely growing as it adds more and more smartphone users to its Windows ecosystem, leading to increasing revenue and profits.

Disclosure: I am long MSFT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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