We have known that Microsoft's answer to Siri was in the works and code-named Cortana but for the first time, we get a video demo leak. Cortana will be included in Windows Phone 8.1
Since Cortana requires a Microsoft account, it is almost certain that the heavy lifting is being done in the cloud and that it will use its cloud storage infrastructure to move your profile (searches, customizations, etc) between devices.
There will be a customization process to ensure Cortana give you the best possible response (as an example what type of restaurants you prefer).
We expect Windows Phone 8.1 sometime in April and we believe existing Windows Phone 8 devices can be upgraded to the latest OS (shouldn't require a brand new phone).