Microsoft has confirmed that customers can purchase upgrade media and an upgrade license at a discounted price to move from Windows XP to Windows 7. However, customers need to do a clean installation of Windows 7. The pricing details of XP upgrade licenses are not yet known.
An operating system upgrade offers users the option of choosing between in-place upgrades, with installed applications & data in-place in the machine and a fresh installation which overwrites the hard drive's contents. By eliminating in-place upgrades, users can have a reliable installation after backing up all their data and applications. But still considering the huge number of XP systems in use, it is going to be a tedious upgrade as a lot of backup has to be done.
Microsoft has been working on ways to help Windows XP users make the move by providing other tools and ways to get through upgrade process, but declines to provide further details on how it intends to simplify the upgrade process.
Microsoft also plans to shift XP from mainstream support to extended support on April 14, 2009. Mainstream support delivers free fixes for security patches and other bug fixes to everyone. Extended support delivers security updates to all users, but nonsecurity hot fixes are to be provided only to companies that have signed support contracts with Microsoft.
Till now Microsoft has issued 3 service packs for XP. In December 2008, Microsoft extended XP's sales life span to mid-2010 to account for netbooks. Michael Cherry, an analyst at Directions commented about XP's popularity as it is the first time he can remember that we have a situation where people will be continuing to buy devices (netbooks) with an operating system no longer in mainstream. He added that for any pre-installed copy of Windows XP, support that customer buys is not tied to the Microsoft Support Lifecycle policy, but rather to the OEM's support policy. So, if a consumer purchases a netbook today with Windows XP Home pre-installed, their primary support would be through the OEM. It is also clear that Microsoft is taking Windows 7 and netbooks seriously.
If you are looking to upgrade your Windows Vista to Windows 7 beta, you can read our upgrade process overview here