The majority of businesses are still running Windows XP—but with Windows 7 now available, many companies are weighing the costs and benefits of upgrading from XP to Windows 7. XP is a well-known commodity; it’s stable, but it has also grown a bit long in the tooth since its release back in 2001. Windows 7 offers many enhancements over XP both from a usability perspective and in the areas of security and manageability. For more information about the new features, see Windows 7 in the Enterprise.

Unfortunately, the path from XP to Windows 7 isn’t a smooth one. Although XP users qualify for upgrade licensing, there’s no in-place upgrade from XP to Windows 7. The only way to upgrade in-place is to go from XP to Windows Vista, then from Vista to Windows 7. This is a time-consuming and risky process that few users want to attempt.

The best way to move from XP to Windows 7 is to buy a new system with Windows 7 preinstalled. Today’s multi-core systems are significantly more powerful than the desktop systems built a few years ago. Replacing both the hardware and the OS would provide the best results in the long run. However, not all businesses are ready to replace their desktops with new systems—even though the economy appears to be turning.

Upgrade Process
Although installing Windows 7 on an older XP system is possible, there are difficulties and limitations with this approach. In fact, because there’s no in-place upgrade from XP to Windows 7, the upgrade process might be more aptly termed a migration. The general process for moving from XP to Windows 7 is:

  1. Select an edition of Windows 7.
  2. Verify your system’s Windows 7 compatibility.
  3. Use Windows Easy Transfer to migrate your XP data and settings.
  4. Install Windows 7.
  5. Restore your data and settings.
  6. Reinstall your applications.

Selecting a Windows 7 Edition
The first issue to address is whether you want to upgrade to the 32-bit or 64-bit edition of Windows 7. This decision mainly depends on the processor capability of the system being upgraded. Most new systems have 64-bit processors, but many older systems don’t. (If you’re not sure whether your system is 64-bit capable, download and run the SecurAble utility from Even if the system to upgrade is 64-bit capable, you’ll really only benefit from the 64-bit edition of Windows 7 if you plan to use more than 4GB of RAM in the system. Moving from 32-bit to 64-bit as part of the upgrade could also result in device compatibility issues because there are more 32-bit device drivers than 64-bit device drivers. The bottom line is that if your system is already running 64-bit XP, go ahead and upgrade to 64-bit Windows 7. If the system is 32-bit, as most XP systems are, then you’re probably better off upgrading to 32-bit Windows 7. The exception to this is the rare case in which the hardware is 64-bit capable and you need more than 4GB of RAM.

After you’ve made the decision as to which CPU platform to use, you need to consider two additional upgrade aspects: upgrading your Windows license and upgrading the OS itself. Microsoft provides all XP users with a reduced upgrade license cost. Table 1 lists the retail costs for Windows 7 editions.

Most business users will want Windows 7 Professional, Enterprise, or Ultimate, all of which support joining a domain and management using Group Policy—unlike the Starter and Home editions. With essential features such as BitLocker and AppLocker, the Enterprise Edition is the most desirable—but it’s limited to Software Assurance (SA) customers. If you want these Windows 7 features and you’re not an SA customer, you’ll need to upgrade to Windows 7 Ultimate.

Verifying Windows 7 Compatibility
It’s important to remember that Windows 7 is essentially the next release of Vista. It shares most of Vista’s core attributes, including the Aero interface, a new device driver model, and User Account Control (UAC). One of the reasons that Windows 7 has received better acceptance than Vista is the fact that there has simply been more time for Microsoft and third parties to address the main customer complaints about Vista. For example, Microsoft refined UAC to reduce the number of notifications, and performance-tuned Windows 7 for the tasks customers commonly perform, thereby making the OS more responsive. In addition, third-party hardware vendors have had an additional three years to develop Vista- and Windows 7-compatible device drivers, which reduces the problem of incompatible hardware.

When evaluating your XP system’s hardware platform in preparation for upgrading, it’s important to remember that Windows 7 has higher system requirements than XP. The minimum Windows 7 system requirements are:

  • 1GHz or faster 32-bit (x86) or 64-bit (x64) processor
  • 1GB of RAM (32-bit) or 2GB of RAM (64-bit); additional 1GB of RAM for Windows XP Mode (XPM)
  • 16GB of available hard disk space (32-bit) or 20GB (64-bit)
  • DirectX 9 graphics device with Windows Display Driver Model (WDDM) 1.0 or higher driver
  • 128MB of video memory for the Aero interface

Keep in mind these are Microsoft’s minimum requirements—you’ll get a much better experience running a multi-core system with 2GB of RAM or more. Many existing XP systems meet the minimum requirements, other than the graphics support. Many older systems, especially those with integrated graphics adapters, don’t meet the Windows 7 Aero interface requirements. However, this doesn’t mean these systems won’t run Windows 7, because Aero support isn’t required. You can run Windows 7 using the Windows 7 Basic or Classic themes; you just won’t have the catchy Aero features, such as transparent windows. However, Aero might not be vital to some XP users because XP doesn’t have this feature either. To take advantage of Aero on XP, you can perform a graphics upgrade.

If the XP system you’re upgrading meets the minimum system requirements, the next step is to run the Windows 7 Upgrade Advisor, which scans your system’s devices and applications to see whether they’re compatible with Windows 7. The Windows 7 Upgrade Advisor runs on Windows 7, Vista, or XP SP2 and requires the .NET Framework 2.0.

To start your Windows 7 installation, first install the Windows 7 Upgrade Advisor on the XP system you want to migrate. The installation process takes just a few seconds. Then, run the Windows 7 Upgrade Advisor from the Start menu. After the Windows 7 Upgrade Advisor starts, you need to select the option to scan your system. The scanning process takes several minutes; when it’s finished you’ll see a results window similar to the one in Figure 1.

The Windows 7 Upgrade Advisor flags serious upgrade issues with a red X. Warnings are marked with a yellow triangle, and a green check mark shows requirements that passed. For example, in Figure 1 the system will require a RAM upgrade before the Windows 7 upgrade. Although you should consider the cause of warning errors, you need to realize that they won’t prevent the upgrade. Nevertheless, if the Windows 7 Upgrade Advisor points out an issue, you should evaluate and resolve the problem if necessary before proceeding with the upgrade.

Using Windows Easy Transfer
Once you’ve made sure that the XP system meets the requirements for upgrading to Windows 7, you’re ready to begin the upgrade process. Although you can’t transfer your existing XP programs to Windows 7, you can use the Windows Easy Transfer tool to transfer your desktop data and settings.

Windows Easy Transfer for XP can move Windows data and settings from a 32-bit version of XP to either a 32-bit or 64-bit version of Windows 7. It can also move data and settings from a 64-bit version of XP to a 64-bit version of Windows 7, but it can’t move from a 64-bit version of XP to a 32-bit version of Windows 7.

You need to install the Windows Easy Transfer wizard on your XP system before beginning the Windows 7 setup process. Installation is simple and takes only a few seconds. After setup is complete, you can run the wizard from the Start menu. Clicking through the Windows Easy Transfer welcome screen takes you to the screen in Figure 2, where you can select a transfer method.

If you’re migrating to a new computer, select either An Easy Transfer cable or A network. An easy transfer cable is essentially a USB cable that connects two computers. A network uses your existing network for the XP-to-Windows 7 link. However, both of these options require the Windows 7 system to be available on the network—which isn’t the case if you’re upgrading an existing system. For an upgrade, use the third option: An external hard disk or USB flash drive.

Windows Easy Transfer will save your current data and settings to a file. After you select a transfer option, Windows Easy Transfer will analyze your system for items to transfer and will estimate the size of the transfer. Most XP systems will contain a lot of data. Although the data is compressed, the size could easily be hundreds of gigabytes. Remember that if you’re upgrading an existing system you don’t need to transfer your data because it will already be there. If you just want to transfer your settings, select the check box next to your user profile and click Next.

You’ll need to provide a password for the file. Select the Save As option to select a location for the file. The dialog box will indicate that you should save the file to a USB key or a network drive, but you can actually save it anywhere, including the local drive. If you’re performing an upgrade of an existing system, the local drive is the best place to store the file—if there is adequate disk space. Saving the settings and files takes a few seconds to several minutes depending on the amount of data and the storage location you select. By default, Windows Easy Transfer saves the data and settings in a file named Windows Easy Transfer - Items from old computer.MIG.

As cheap insurance you might consider purchasing an additional hard drive and performing a clean installation of Windows 7 on that drive, to leave your existing XP installation and files intact. However, don’t be misled into thinking that you’ll have a dual-boot system. Although there are ways to create a dual-boot XP and Windows 7 system when installing Windows 7, it’s more involved than just installing Windows 7 on a new hard drive. (For information about dual booting Windows 7 with an existing OS, see How do I dual boot an existing OS with Windows 7 or Windows Server 2008 R2 installed in a virtual hard disk \[VHD\] file?)

Windows 7 Clean Installation
To start the Windows 7 installation process, insert the Windows 7 installation media on a system that’s running XP. The installation process lets you choose between Checking compatibility online and Install now. Since you’ve already run the Windows 7 Upgrade Advisor and resolved any issues that would thwart the installation process, select Install now. The Windows 7 setup program will install the required setup files on the XP system and will display the Get important updates for installation screen. Although the default option is Go online to get the latest updates for installation (recommended), selecting Do not get the latest updates for installation is a faster option. You must also agree to the EULA.

Next, you must specify either custom installation or upgrade. Note that the upgrade option doesn’t work, although you can select it. To install Windows 7 on your XP system, select Custom (advanced). Choosing this option starts a clean installation of Windows 7.

The setup program then displays the available partitions on the system and asks you for the partition on which to load Windows 7. Select the appropriate disk partition and click Next. If the partition contains your XP system files, the setup program creates a Windows.old directory and moves your existing Windows directory into it. Your system’s Program Files directory is also saved in the Windows.old directory, but you won’t be able to use your XP programs from your Windows 7 installation. The Custom option copies the Windows 7 binary files to the selected partition.

From this point on, follow the standard Windows 7 setup procedure. Select the country, language, and keyboard layout. Provide a user account name and computer name, as well as a password and password hint for the user account. Enter your Windows product key when prompted. Select the method you want to use for Windows Update. (The default is Use recommended settings, which automatically downloads and installs updates every day at 3:00 A.M.) Next, select your time zone and set the system clock if necessary. Finally, select the type of network you’re connected to—home, work, or public. If you’re upgrading an XP business system, you’ll typically want to select the Work network option. If you’re upgrading a personal system that you use at home, you’ll want to select the Home network option.

After setup completes, you’ll see the Windows 7 desktop that Figure 3 shows. Note the new Windows 7 taskbar at the bottom of the screen. In the upper right half of the screen you can see Windows 7 Explorer, with the new Libraries feature. The adjacent treeview shows the Windows.old directory, with its Documents and Settings, Program Files, and Windows subdirectories. This is where the setup program saved your XP system files and applications.

Restoring Data and Settings
After Windows 7 is installed, you need to restore the XP data and settings that you used Windows Easy Transfer to save earlier. This step doesn’t require any installation on the Windows 7 system. Simply open Windows Explorer, navigate to the directory where you saved your Windows Easy Transfer file, and double-click the file. Windows 7 will automatically start the Windows Easy Transfer program and prompt you for the password for the Windows Easy Transfer file. You must then select the items you want to transfer. After your XP data and settings are restored, you’ll need to reboot. The reboot will restore your desktop and other user profile settings from the XP system. This step completes the migration, and you can move on to reinstalling your programs.

Reinstalling Programs
Because there’s no in-place upgrade, moving your programs to Windows 7 requires reinstallation. Be sure to have your installation media handy, as well as the installation keys or activation codes for each application that you want to reinstall. Microsoft provides absolutely no help for reinstalling programs, but you can use a third-party product such as Laplink Software’s PCmover ( to transfer programs and applications between systems.

Before installing your applications, check each vendor’s website to verify Vista or Windows 7 compatibility. Not all vendors list Windows 7—but most Vista-compatible programs also run on Windows 7. For specific information about program compatibility, see Microsoft’s Windows 7 Compatibility Center. Even if a program isn’t listed by Microsoft, there’s a good chance it will still run on Windows 7.

If you encounter a program that won’t install on Windows 7, try checking its compatibility properties. Right-click the setup program, select Properties from the context menu, and click the Compatibility tab. To change a program’s compatibility level, select the Run this program in compatibility mode for check box, then select the desired OS from the drop-down list, as Figure 4 shows. For programs that simply won’t install or run, you can use Windows 7’s new virtualization-based compatibility capability, called Windows XP Mode (XPM).

Windows XP Mode for Windows 7
XPM for Windows 7 is essentially an updated version of Microsoft Virtual PC that includes a fully licensed copy of XP SP3. It’s free for Windows 7 Professional, Enterprise, and Ultimate customers. Because XPM requires a virtualization-enabled CPU, your processor must have either Intel-VT or AMD-V support. You can use the SecurAble utility that I mentioned earlier to determine whether your CPU supports virtualization.

Unlike Virtual PC, in which every virtual machine (VM) runs in its own window, XPM uses a VMware Fusion–like capability to display a red-bordered window on the Windows 7 desktop that lists the names of applications running in XPM. When you install applications to the XPM environment, Start menu links and shortcuts are installed on the Windows 7 desktop as well.

XPM is a heavyweight, last-resort compatibility solution. It requires you to run a full VM, with a full copy of XP SP3, the Virtual PC software, and the XP application itself. Despite many overly enthusiastic claims, XPM doesn’t provide 100 percent XP compatibility. The limitations of the Virtual PC environment prevent XPM from running many games or other applications that require advanced graphics capabilities. However, XPM does provide USB support, which is a nice improvement over Virtual PC 2007. To download the early release of XPM, go here.

Best OS Yet
Windows 7 is the best Windows desktop OS yet. Buying a new system with Windows 7 on it is the easiest way to upgrade from XP. If new hardware isn’t in your future, you can still transition to Windows 7, with some effort. Although an in-place upgrade isn’t possible, you can perform a clean Windows 7 installation and then use the Windows Easy Transfer utility to move your settings to the new installation. Windows 7’s improved application compatibility and XPM let you run many programs that Vista couldn’t. For more information about moving from XP to Windows 7, see the Microsoft article Upgrading from Windows XP to Windows 7.