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Computerworld - Microsoft Corp. will provide free or discounted Windows 7 upgrades not only to users who buy Vista PCs between June 2009 and January 2010, but also to people who buy systems that have been factory-downgraded to Windows XP, according to a report on the Web.

TechARP.com, a Malaysian Web site that earlier this year leaked Microsoft's upgrade plans, said Saturday that users who purchase PCs equipped with a Windows XP downgrade will also be eligible for the "Windows 7 Upgrade Option" program.

In Microsoft's terminology, "downgrade" describes the Windows licensing rights that let users of newer versions replace the operating system with an older edition without having to pay for another license. In effect, the license for the newer Windows is transferred to the older edition.

The inclusion of new PCs running Windows XP shouldn't come as any surprise, since by definition, those systems also come with a license for Vista. "Unlike actual Windows XP installations, [these PCs] come with a Windows Vista COA (Certificate of Authenticity) and are therefore eligible for the upgrade program," said TechARP. "Hence, users with Windows XP downgrade licenses can upgrade to Windows 7."

Because Microsoft allows downgrades only from Vista Business and Vista Ultimate, the free or discounted upgrades to Windows 7 will be for Windows 7 Professional or Windows 7 Ultimate, respectively, claimed TechARP.

One caveat: Windows XP users will not be able to do an in-place upgrade to Windows 7, as can people running Vista. Instead, XP owners will have to do a clean install of Windows 7 that overwrites the hard drive's contents.

Computer makers will be allowed to start shipping the Windows 7 upgrade media to customers when Microsoft announces the general availability of the new operating system.

As with the Vista Express Program, a similar marketing effort that offered free or discounted upgrades to Vista to people who purchased an XP-equipped machine during the three months leading to Vista's launch, PC makers will be allowed to set their own pricing for the Windows 7 upgrades. Hewlett-Packard Co., for example, gave away the upgrades, while others, including Dell Inc., charged some users. Dell added $49 to the shipping and handling fee for Windows XP Home users who wanted to upgrade to Vista; XP Media Center and XP Professional users paid only the shipping and handling.

According to TechARP, new PCs purchased between June 26, 2009, and Jan. 31, 2010, with a downgrade to XP Professional Service Pack 3 (SP3) will be eligible for a free Windows 7 upgrade. The site also said that XP users will be able to run Windows Easy Transfer from the Windows 7 installation disc prior to upgrading; that utility will let users save files and some Windows settings to an external drive, such as a flash drive, then, after the hard drive is wiped and Windows 7 installed, migrate those files and settings to the new operating system.

Although Microsoft has not committed to a delivery date for Windows 7, last month the company inadvertently revealed that it will post a release candidate next month.

Microsoft was not immediately available for comment on Monday, but it has previously declined to comment on reports of its Windows 7 upgrade offers.

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