We have already seen Microsoft plans for offering Windows Vista to Windows 7 upgrade. Vista users can buy Windows7 upgrade kit and install over existing Vista without losing any data or software installed on the computer. What about Windows XP users?
Unlike Vista to Windows 7 upgrade, there will no direct media avialable for XP to Windows7 upgrade. However, XP users can upgrade their license from XP to Windows7 and perform clean install. So, you need to backup all the data and perform clean install of Windows7 on your XP computer.
This is echoed by official Microsoft line as well “… customers can purchase upgrade media and an upgrade license to move from Windows XP to Windows 7. However, they will need to do a clean installation of Windows 7. This requires the user to back up their data, install Windows 7, re-install the programs and restore their data.” So there is one option of buying Windows 7 license and performing clean install on Windows XP computer.
