Microsoft Kills Windows 7 Family Pack, Shoots Self in Foot

The blink-and-you-missed-it software deal to get three upgrade licenses of Windows 7 Home Premium for $150 is now history. A Microsoft spokesperson stressed to BetaNews this week that the Windows 7 Family Pack “offer has not been ‘pulled'” but rather sold out.

Uh huh … and reindeers can fly.

How convenient that the Family Pack has “sold out” just as the holiday shopping season kicks into high gear. Now you’ll have to pay $360 if you want three licenses. Merry Christmas.

Microsoft has said all along that the Windows 7 Family Pack is a “while supplies last” program. Seems they didn’t last too long. It hasn’t even been two months since Windows 7 launched.

[ For complete coverage on Microsoft’s new Windows 7 operating system — including hands-on reviews, video tutorials and advice on enterprise rollouts — see CIO.com’s Windows 7 Bible. ]

If you’re a family with three PCs and you want Windows 7 on all of them, the price has more than doubled. Microsoft simply wants you to spend more so it can squeeze revenue out of copies of Windows 7. Does Redmond have this little respect for buyers’ intelligence?

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It’s not as if many people buy copies of the Windows 7 software. Nearly all PC users get to a new version of Windows by purchasing a new computer. A very small percentage buy copies of Windows and do in-place upgrades (if upgrading from Vista) or the more laborious clean installations (if upgrading from Windows XP).

It’s from this tiny minority that Microsoft is trying to wring out revenue during the holidays in a fragile economy. It doesn’t make much sense. Isn’t Microsoft trying to get as many people as possible off XP and Vista and on to Windows 7? In what looks like a desperate bid for profits, Microsoft is killing a nice group discount and doubling the price for something that not that many people do in the first place (operating system upgrades via installation).

Any family with multiple computers in the house who wants to get them all upgraded to Windows 7 will look at the new price of doing so and say no thanks. They’ll stick with Vista or XP. They’ll buy just one copy of Windows 7 when they would have bought three with the package deal.

Maybe Microsoft is hoping families will cave in and buy a new computer or two or three. A family buying three new Windows PCs would seem like a victory to Microsoft until you realize that, on average, Microsoft makes roughly $50 on each PC sold, the same amount it would have made if the family bought the Windows 7 Family Pack at Microsoft’s original $150 price.

It’s Microsoft’s revenue-hungry hardware partners that would win in that scenario. So in a sense, Microsoft is keeping it in the family, just not your family.

Shane O’Neill is a senior writer at CIO.com. Follow him on Twitter at twitter.com/smoneill. Follow everything from CIO.com on Twitter at twitter.com/CIOonline.