Windows XP to Windows 7 upgrade possible

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.
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More at here
 
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Thats good news, but how do the upgrade versions work? I dont understand them at all.
 

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