To upgrade is to make improvements to something or exchange it for a better version. Some people upgrade their phone every time a new model comes out, while others prudently wait to see which new features they really need.
Upgrade is also a noun: "I was lucky enough to get an upgrade to the first-class section of the plane!" Whether a noun or a verb, this word commonly used to refer to electronic equipment, particularly computers and smartphones. If a company upgrades the network in their offices, they purchase new computers or improve internet connection speeds. The original meaning of the noun upgrade was "sloping up," as in a steep hill.