Why Microsoft shouldn't kill the $150 Windows 7 Family Pack
12/08/2009 01:14:00 PM
kenmouse
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The $150 Windows 7 Family Pack, which consists of three Home Premium edition upgrade licenses, has been killed off prematurely.Reports have started trickling in that Microsoft has killed off the Windows 7 Family Pack in the United States. Although we expected this to happen eventually, it's a pity that it happened so soon: two months haven't even passed and the pack is no longer available on most retailer websites. "The Windows 7 Family Pack was introduced as a limited-time offer while supplies last in select geographies," a Microsoft spokesperson told Ars. "Response has been very positive and in some cases, the offer has sold out. Customers interested in upgrading their PCs should purchase Home Premium, Professional or Ultimate upgrade products." The company wouldn't reveal how many copies have sold so far, how many it had planned on selling, or whether there are plans to extend the offer.
The official Windows 7 Family Pack webpage couldn't be any clearer: "Thank you for your interest in Windows 7. The Windows 7 Family Pack offer has ended. Please check our other offers." The deal is likely to expire in other markets as soon as remaining copies sell out.
Microsoft announced the three-computer Windows 7 Family back in July 2009 and a week later gave it a price tag of $150. The offering, which includes three Windows 7 Home Premium edition upgrade licenses, became available on October 22, 2009, and Microsoft warned that it would be a "until supplies last" promotion in select markets. You can still find the pack in the US, but definitely not for $150 as retailers start to take advantage of the expiry of the deal by ramping up the price.
Microsoft pulled the pack too early
While Microsoft clearly warned us that the deal would expire at some point, the timing is very poor: it is conveniently ending right before the holiday shopping season. In the past, Microsoft has said that about 95 percent of users upgrade to a new version of Windows when they purchase a new computer; the other five percent purchase retail copies and go from there. Microsoft is thinking that it can make more money by forcing this minority of users to pay $360 for three upgrade licenses of Windows 7 Home Premium instead of $150. Microsoft makes about $50 for every Windows PC sold and thus is making roughly the same amount revenue from the Family Pack deal, but clearly the software giant is hoping to make more from retail sales. That's flawed logic, though, as most people will be less likely to buy three licenses at such a price. Microsoft would gain a lot more from keeping the deal around longer.
We're assuming here that those who are purchasing upgrade versions are owners of computers that can run Windows 7 adequately; Microsoft obviously doesn't want users with old computers that can't run the operating system to upgrade. By killing this deal, however, Microsoft is sending the wrong message to consumers that would normally have bought it. These consumers will do the basic math and simply wait to buy a new computer, purchase fewer than three licenses, or worse, join those who pirate Windows. Microsoft should be doing everything it can to get users onto Windows 7 as soon as possible, especially users who are running Windows XP, an almost nine-year old operating system that still dominates in market share. Instead, the company is limiting the number of sales of Windows 7 for these holidays, in the hopes that the revenue per copy will be higher.
Though few remember it, Microsoft also offered a Family Pack deal for Windows Vista, but it worked a little differently: a purchase of Windows Vista Ultimate at retail gave you the opportunity to buy up to two additional keys for Home Premium at the reduced price of $50 each (Vista Home Premium upgrade cost $159 at the time). Microsoft learned this time by changing the deal from a copy of Ultimate and two more copies of Home Premium at reduced pricing to three copies of Home Premium at an overall reduced price. The company also noticeably slashed the price of a Home Premium upgrade license. Still, the software giant royally messed up on the length of time the offer is available. The Windows Vista Family Pack lasted from January 30, 2009 until June 30 of that same year.
So far, the Windows 7 Family Pack has lasted around five weeks. Of course, there's still a chance that Microsoft will bring back the deal for certain limited periods of time (maybe Microsoft is just making a point to skip the holidays, when it expects consumers will buy upgrades regardless of the price). Still, that's backwards thinking: ideally the deal should be offered until Windows 8 starts hitting retail shelves. The Windows 7 Family Pack offer is an excellent deal as households tend to have multiple Windows PCs. For this reason alone, it should be a permanent deal.
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