While Microsoft refuse to comment on the existence of Windows Blue, other 3rd-party sources are beginning to spill the beans on what Windows Blue actually is. So far we've pin-pointed Windows Blue as an upgrade for Windows 8 and Windows RT. Along with the update, we will see big improvements to the NT kernel, which will make it faster and smaller. Search is supposed to see a rather big overhaul too.
New reports released today are stating that Windows Blue will be a free upgrade for Windows 8 and Windows RT users. It was originally thought that the Windows Blue upgrade was going to be paid. We'll have to wait and see it seems.
Windows Blue will also see support for smaller and larger screens. This will allow for either small 7 inch devices, or large 50 inch monitors. Either way, it's a welcomed improvement, as the current screen sizes in Windows 8 seem to be rather limited.
On the development side of things, it appears Windows Blue has entered Milestone Preview. This milestone is said to begin tightening things for a public preview which is set to launch in the coming months. RTM will begin on June 7th, so we might see the preview in May.
Finally, Windows Blue is expected to launch in August of this year. As said above, it will be a free upgrade for current Windows 8 and Windows RT users. We expect customers will have to pay for Windows 8 + Blue if they are upgrading from Windows 7 or below.
Of course, as all the information above is from 3rd party sources, we ask you read with a grain of salt.