Microsoft to offer Family Pack for Windows 7 Home Premium

Update: A few small retailers have inadvertently leaked details of Family Pack and Anytime Upgrade pricing. See my follow-up here: Windows 7 Family Pack, Anytime Upgrade prices leak

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In two recent posts (Windows 7 versus Snow Leopard: How much do upgrades really cost? and Do you need more than Windows 7 Home Premium?), I took a closer look at the differences between Windows 7 editions and their counterparts from Apple. In the Talkback section of both posts, several commenters noted that Microsoft is still far behind its archrival in Cupertino. Until Microsoft comes out with a Family Pack license, they say, Apple will continue to have the upper hand.

Well, maybe the wait is over.

Thanks to a tip from Kristan Kenney, I took a close look at the agreements embedded in the License folder of the latest leaked builds of Windows 7. This is no longer a beta license agreement and is presumably very close to the final agreement that customers will accept. The agreements for retail copies of Windows 7 Home Premium contain this eye-opening clause:

If you can't read the screen shot, here's the relevant section: "If you are a 'Qualified Family Pack User', you may install one copy of the software marked as 'Family Pack' on three computers in your household for use by people who reside there." (And a proofreading note to Microsoft Legal: Fix the typo in the last sentence of that clause before RTM.)

When I first wrote about Windows 7 pricing last month, I speculated that Microsoft was likely to have a program like this up its sleeve:

What else can we expect to see? Back in early 2007, Microsoft offered a so-called Family Discount for Windows Vista, which allowed anyone with a Vista Ultimate license to purchase two Home Premium upgrades for $49.99 each. I expect to see an improved version of the Family Discount this time around. If Microsoft wanted to aim directly at its archrival Apple, it could sell three Home Premium upgrade licenses (to be used only in a single home) for $199 or less.

I'm going to go out on a limb and predict that Microsoft prices the Family Pack at $189, which is $10 less than Apple's Family Pack (although Apple's license is good for five Macs in a single household).

By the way, these same terms are also contained in the license agreement for Windows 7 Home Premium E (the one sold in Europe, sans Internet Explorer), as well as the N, K, and KN Home Premium versions, which are also deliberately gutted of one or more features to satisfy antitrust authorities. The Family Pack language  is not included in the license agreement for any other Windows 7 edition.

Just as with Apple's Family Pack license (PDF), the deal will apparently be restricted to users in a single household and is not available for business users. Apple's agreement specifically says: "The Family Pack License does not extend to business or commercial users." No such clause is in the Windows 7 license agreement, but it's probably contained in the definition of a "Qualified Family Pack User," which is referred to in a link that isn't yet live.

In some respects, this is an extension of Microsoft's licensing efforts with Office 2007 Home and Student edition, which is licensed for use (PDF) on up to three computers in a single household. In that case, the product carried this restriction: "The software is not licensed for use in any commercial, non-profit, or revenue-generating business activities."

Update: My colleague Mary-Jo Foley asks some interesting questions about the the Vista predecessor:

Microsoft ended up offering a Family Pack for Vista, but wouldn’t confirm its existence until just before the worldwide launch of Vista in January 2007. The company made the Vista Family Pack available to users who bought Vista Ultimate at retail. (But Microsoft may have phased out the Family Pack offer, as it no longer shows up when searching the Windows site.)

I've mentioned that offer several times in the past few years. There are some very big differences between that deal (which was called the Windows Vista Family Discount) and the one that appears to be on its way for Windows 7. As the original press release (linked above) made clear, the Vista Family Discount was a "limited-time offer for customers who buy retail copies of Windows Vista Ultimate." In other words, it was a temporary discount on products that were otherwise licensed according to standard terms.

Also in that announcement was the news that it was a limited promotion that ran from January 30 through June 30, 2007. This deal, on the other hand, is actually named in the license agreement, which strongly suggests that it is a permanent addition to the list of retail packages and not a temporary promotion.

What price would you pay for a three-pack of Home Premium licenses?

Update, Noon Pacific time: Reached for comment, a Microsoft spokesperson says only, "We will continue to work with our partners and expect to have other great offers in the future as we lead up to and beyond general availability. We have nothing to announce at this time."