Microsoft's TechFest event earlier this month is largely an internal only affair where Microsoft Research demonstrates a number of new technologies its working on. However, that hasn't stopped Stephen Chapman over at MSFTKitchen who has posted up a video of one of the private events. Microsoft's chief technical strategy officer, Eric Rudder, discusses the next version of Windows briefly at the start of the video. "We're really excited to work, now that the next version of Windows is coming, to make sure that we extend touch in even more dramatic fashion," says Rudder, hinting that Microsoft is considering touch improvements across Windows Blue.

Rudder then proceeds to note the balance of being open about the company's plans and its continued investment in research, after an app demo gets delayed due to a technical issue. "If you look at a company like HP now that's kind of struggling and cut their R&D budget, I think they may have wished there's some stuff in the factory they could drop on and sort of renew themselves," says Rudder.

Fresh Paint gets watercolor feature for Blue

The application demo, a new version of Fresh Paint for Windows Blue, doesn't show any specific Windows Blue features, but the presenter walks through a new addition: watercolor. Microsoft says that "for Blue" it's trying to add watercolor and mixed media to its Fresh Paint application. The app was a showcase for Windows 8, allowing users to ink and use touch to draw using digital paint.

Although company officials confirm the Blue codename in the video, there are no hints at when we'll see this next version of Windows. We understand that Microsoft is preparing a public preview version that includes significant search improvements. Blue will also include support for 7- and 8-inch devices and will introduce Internet Explorer 11. It's expected to be made available as an upgrade to Windows 8 later this year.