At the D9 conference today, Steve Sinofsky, President of Windows and Windows Live at Microsoft, gave the first look at the next version of Windows, currently "codenamed" Windows 8. On display was the new touch user interface: an interface designed for tablets and touch computers.

For the first time in its life, Windows will receive a true touch interface. Since Windows XP, Microsoft has tried to graft touch capabilities onto its operating system, but has consistently failed to bridge the gap between precise mouse and keyboard interfaces, and sloppy, imprecise, finger-based interfaces. Windows 8 changes that. Microsoft describes the new interface as "touch first"; it'll work with a mouse and a keyboard, but it was designed for fingers.

The best way to get an understanding of the new interface is to watch Microsoft's video about it. There are also extensive photographs at Engadget and This Is My Next.

The interface has more than a passing resemblance to the Metro look and feel of Windows Phone 7. The Start screen, in particular, with its grid arrangement of live tiles, is very much a scaled up version of the phone interface. Task switching is performed by swiping in from the side; tasks can also be snapped to the side of the screen for a multitasking view.

The demo also confirmed what has been until now something of an open secret: the next Windows will include an application store of some kind. Microsoft didn't talk about this at all, but the live tile confirmed its existence.

It will still be some months before anyone outside Microsoft (and select partners) has any hands-on time with the new interface. Nonetheless, it looks like it will be a serious and credible competitor in the tablet market, and Microsot's tight control of manufacturers should ensure that hardware is done right too. For new applications built to use the new interface, the whole experience should be slick and integrated.

However, this is not just a user interface for tablets: this is going to be the user interface for Windows. Windows 8 will still run Windows application—all of them, with pretty much the same system requirements as Windows 7. One of the application tiles is a full-blown Windows 7 desktop, and this is where legacy applications will run. The new-style interface and new-style applications will be clean and modern, but none of this extended to the traditional applications, which are stuck in their own little ghetto.

While this is understandable for truly legacy applications, it doesn't appear to offer much of a transition path for software that's still under active development. There are plenty of applications that are too complex and fiddly to ever be at home with a touch-first interface—consider a software development environment, or a fully-featured office suite. Leaving these stuck in a Windows 7 ghetto doesn't seem like a good long-term option.

Related to this issue is the question of how new-style applications will be written. Microsoft said that they will be HTML5 plus JavaScript, but again this precludes the possibility of migrating existing applications to the new interface. I'm told by insiders that HTML5 and JavaScript won't be the only option, and that existing applications (native, Silverlight, and WPF) will be migratable in some way, but specifics are still lacking at this time.

Windows Phone application compatibility would also be desirable—Windows Phone applications are already touch first, and already Metro-themed, and the compatibility between iPhone and iPad applications helped Apple rapidly fill its App Store with plenty of iPad applications—but a pure HTML5 with JavaScript development environment would rule this out, too. Conversely, will we see an option for HTML5 application development on the phone? On today's showing, it would make sense.

These questions should receive an answer in September. Simultaneously with the Windows 8 demo, Microsoft announced its next major developer event, BUILD, to be held in Anaheim in September. This event will take the place of the company's traditional PDC (Professional Developers' Conference) event. Reflecting the explosion in software development that tablets and smartphones have heralded, it will be aimed at a much broader developer community—encompassing open source developers and hobbyists in addition to the professionals—and reflecting the closer ties between hardware and software, it will also touch on hardware tasks, somewhat subsuming Microsoft's WinHEC conferences for hardware developers.

There's still no word on a release date, with the second half of 2012 still being the most likely estimate. As a result, Microsoft will still have plenty of work to do if it wants to become a serious player in the tablet space. The company will be late, there's no doubt about that. But as late as it will be, the promise of true Windows compatibility for those times you need it, and a fast and attractive interface for times that you don't, could yet make Microsoft a real contender in the market.