Existing Windows Phone 7 devices will get updated to Windows Phone 7.8, not Windows 8
Looks like some of the earlier rumors about the upgrade path for existing WP7 devices turned out to be true. Microsoft just now announced that existing WP7 devices will not get updated to WP8, instead they'll get WP7.8 and a partial update feature set, including the new home screen with customizable live tiles.
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