I remember reading something about "Blue" at another tech site a few weeks back. From what I understood there, it's MS' attempt at homogenizing all their products, code bases, ect. under one umbrella. In other words, there won't be an Office team fighting against the Windows team, nor the Windows team killing off promising technologies simply because it doesn't directly benefit the Windows brand.
It's the one thing Microsoft desperately needs to do (become a little bit more lean, mean, and Apple like), and one of the reasons why Sinofsky was given the boot. He was one of the people who liked keeping everything at MS segregated, and supposedly wasn't on board with the whole unification attempt.