Partners Say Microsoft Bungled Windows 7 Family Pack

Launched in October, Microsoft's Windows 7 Family Pack offer included three Windows 7 Home Premium upgrade licenses and was priced at $150, more than $200 off the list price. Microsoft said the offer would continue for a limited time but didn't say exactly when it would end. Sometime in late November, Microsoft stopped selling the Windows 7 Family Pack, and major online retailers quickly sold out too.

Consequently, customers who'd been planning to buy the Windows 7 Family Pack are now finding that it's only available from smaller retailers who've jacked up prices in response to the dwindling supply. Naturally, many customers are now furious about what they perceive to be a bait-and-switch by Microsoft timed to coincide with the holiday shopping season.

"All Microsoft had to do was set a date certain for the expiration of the offer. That would have been the sensible thing to do," said Bob Nitrio, CEO of Ranvest Associates, an Orangevale, Calif.-based technology consultant. "With no clear deadline from Microsoft for the Family Pack offer, I can understand why consumers would be upset and disillusioned."

While Microsoft's intention was to build positive buzz around Windows 7, the promotion is now having the opposite effect. But this comes as no surprise to some solution providers who've dealt with the customer confusion these promotions have created in the past.

"Once an end customer sees pricing on the market that is significantly lower than what we can generally offer, they expect that same or better pricing before moving forward," said Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder.

Customer frustration with the Windows 7 Family Pack also has other sources. There's still plenty of lingering resentment in the market over Windows Vista, and some customers and partners who dealt with that fiasco feel that Windows 7 pricing should have been lower to begin with.

But Microsoft's Client division, where Windows revenue is booked, has been hammered for the past several quarters due to the cannibalizing effects of netbooks and lethargic PC sales. With Windows 7, Microsoft finally has an operating system that people want, so it makes sense that it would want to maximize its returns.

According to solution providers, Microsoft could quell the Family Pack complaints by going aggressively after the profiteering retailers. "Just once, it would be nice to see Microsoft clamp down on them instead of turning a blind eye to their oftentimes unscrupulous behavior," said Nitrio.

"It's the right thing to do," said Dave Sobel, CEO of Evolve Technologies, a Fairfax, Va.-based Microsoft Gold partner. "By doing so, Microsoft would send a clear message to retailers, and they'd be doing a good deed by making sure these people behave correctly."

Another positive step would be for Microsoft to recognize the demand in the marketplace for the Windows 7 Family Pack and offer it at some price point. Apple has offered a family pack option with OS X for years, and currently sells a five-license Family Pack of Snow Leopard for $50.

Given the large number of homes that have multiple PCs, it makes logical sense for Microsoft to account for this demographic in its licensing, Sobel said.

"Microsoft has long maintained that its licensing is designed to give customers a way to buy exactly the product they want to buy," he said. "There is clearly demand for the Windows 7 Family Pack, and it seems like good business for Microsoft to supply that."