The Windows team at Microsoft just completed the first milestone build (M1) of Windows Blue, the first full-fledged update to Windows 8, according to a couple of sources of mine.

One of my contacts said that M1 marks the half-way point in the Windows Blue development schedule. The last and final milestone build of Windows Blue will be M2, said this contact, who requested anonymity.

It's hard to know what will come next, given Windows Blue is the first Windows release to be on an accelerated schedule . Will Microsoft deliver a developer preview of Blue? A consumer preview? Or just go straight from internal milestone builds to final? (I'm thinking it's likely to be the last option, if the Windows team sticks to an earlier leaked target ship date of August 2013 .)

Making the Milestone 1 talk more believable is the fact that alleged screen shots of Windows Blue leaked to the Web on February 19, the day after M1 was supposedly complete.

According to one of the screen shot leakers, the WZor team (via Winaero.com), there's a rumor that Windows Blue is based on Windows 6.3. I'm hearing from one of my sources that this information is correct. It's version 6.3 for the same reason Windows 7 was version 6.1: It's the version number reported to apps when they query the new platform so that apps know they are running on a new Windows release.

Windows Blue is believed to be the first of a number of annual operating system updates to Windows 8. There also is a Windows Phone Blue in the works that is expected to have the same core code as Windows Blue. (But, just like the Windows Phone 8 operating system, which was version 8.0, the Windows Phone Blue core build number will likely be something different from Windows 6.3.)

Microsoft officials are not commenting on anything having to do with Windows Blue.

Microsoft is expected to position as a Windows 8 refresh, not as Windows 9. Even though there are Microsoft employees out there who have noted on their LinkedIn profiles they are working on Windows 9 , it sounds as though the Windows team is entirely focused on Windows 8 and its coming refreshes. It's not clear to me when and whether Microsoft will roll out something known as Windows 9, given the new plan to deliver Windows operating system updates annually, rather than once every three years.

Microsoft recently posted job openings for new Windows and Windows Phone team members to work on the Blue release, but have since removed those posts.