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1873, "upward slope," from up + grade. The meaning "upgraded version" is recorded from 1980; the verb in this sense is attested from 1920 (implied in upgrading).
jargon (Or "upgradeability") How easily upgrades to a system can be produced and applied. E.g. "Buying a PC with more PCI slots gives you increased upgradeability." (1999-10-11)