In existing Android Studio 1.1, update can be done easily with these steps;
(Tested on MS Windows 8.1)
Step 1: Update Android StudioOpen existing Android Studio (in this case its version 1.1) and click "Check", which is at the bottom of the Android Studio start page.
Step 2: Update configurationAfter it searches for update on the Internet, click "Update and Restart"
Step 3: Update Plugin and other components
Click "Exit Studio and launch SDK Manager".
Choose "Install .. packages..." button. Choose ".
In Choose Packages to Install, choose "Accept License and click Install. My case above, it took 2.9GB of downloads.
Start Android Studio and complete rest of installation.
See an example of creating an Android Studio Project.
Troubleshooting:Problem 1. After creating a new project, there is an Gradle sync error:
Warning:The project encoding (windows-1252) does not match the encoding specified in the Gradle build files (UTF-8). This can lead to serious bugs.
Solution: Upon new installation, the default IDE encoding uses Windows-1252 instead of UTF-8 as in project files. Change this from Android Studio menu File-> Settings-> Editor->File Encodings
Change the default encoding for project files to UTF-8. Click OK. Restart Android Studio and create a new project.
Problem 2: Rendering Problems.
Build the project.