Microsoft Jumps in Consumer Satisfaction

| About: Microsoft Corporation (MSFT)

It must be Windows 7. The University of Michigan-affiliated American Customer Satisfaction Index (ACSI) survey organization announced May 18th that Microsoft (NASDAQ:MSFT) customer satisfaction jumped almost 9% in 2010, while all other computer software companies' indexes grew only a percent as an aggregate.

Just to be clear, from Michigan's consumer-centric point of view there are only two "computer software" companies: Microsoft and "all others." Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) are correctly categorized "internet retail" despite the fact that many analysts often compare them with Microsoft. Dell (NASDAQ:DELL), Apple (OTC:APPL), HP (NYSE:HPQ) and IBM are "indexed" under PCs even though the last three aren't that much interested in PCs anymore (IBM sold its division three years ago). Google (NASDAQ:GOOG) is measured as a portal and blows away its competitors in that category: Yahoo (YHOO), MSN, ask.com, AOL (NYSE:AOL) and Altavista.

As I said above, we're talking consumer software here -- not software for enterprises -- or to be more specific:

Customers of all companies (and some federal agency customer segments) are selected from national and regional probability samples by screening a randomly chosen adult (age 18 to 84 for private sector companies) in each telephone household. The respondent is asked questions about the purchase and use of specific products and services purchased within specified, recent time periods (these periods vary according to the product or service). Those who qualify as respondents are then asked from which company or which brand they have purchased and responses to the ACSI survey questions are coded as a customer interview for that company. The ACSI for each company is based on a sample of 250 customer interviews with more than 65,000 interviews conducted annually.

Still it is better to be up rather than down, especially after four years of being behind "all others" by what looks to be a statistically siginficant spread. As of 2010, Microsoft is instead tied with "all others" on a statistically significant basis. And the explanation for Microsoft sentiment among consumers would appear to be the replacement of Vista with Windows 7. The Michigan work on US consumer spending and sentiment is well respected. Makes you wonder why Microsoft kissed off the guy said to have brought Windows 7 to market, doesn't it?

Despite the consumer angle, this is not insignificant to Microsoft investors. Yeah, this certainly includes some gamers, etc. But when you work your way through the Microsoft 10-K, you do find that Microsoft estimates that it gets 15%-20% of its annual revenue directly from selling Windows and Office to consumers. And that doesn't count the Windows installed on PCs by OEMs, approximately another 25% of Microsoft's annual $55-billion-plus revenue stream.

Disclosure: No positions

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