A Step Sideways: OS/2
During the mid to late 1980s, Microsoft and IBM had cooperatively been developing OS/2 as a successor to DOS. OS/2 would take full advantage of the aforementioned protected mode of the Intel 80286 processor and up to 16 MB of memory. OS/2 1.0, released in 1987, supported swapping and multitasking and allowed running of DOS executables.
A GUI, called the Presentation Manager (PM), was not available with OS/2 until version 1.1, released in 1988. Its API was incompatible with Windows. (Among other things, Presentation Manager placed X,Y coordinate 0,0 at the bottom left of the screen like Cartesian coordinates, while Windows put 0,0 at the top left of the screen like most other computer window systems.) Version 1.2, released in 1989, introduced a new file system, HPFS, to replace the FAT file system.
By the early 1990s, conflicts developed in the Microsoft/IBM relationship. They cooperated with each other in developing their PC operating systems, and had access to each other's code. Microsoft wanted to further develop Windows, while IBM desired for future work to be based on OS/2. In an attempt to resolve this tension, IBM and Microsoft agreed that IBM would develop OS/2 2.0, to replace OS/2 1.3 and Windows 3.0, while Microsoft would develop a new operating system, OS/2 3.0, to later succeed OS/2 2.0.
This agreement soon however fell apart, and the Microsoft/IBM relationship was terminated. IBM continued to develop OS/2, while Microsoft changed the name of its (as yet unreleased) OS/2 3.0 to Windows NT. Both retained the rights to use OS/2 and Windows technology developed up to the termination of the agreement; Windows NT, however, was to be written anew, mostly independently (see below).
After an interim 1.3 version to fix up many remaining problems with the 1.x series, IBM released OS/2 version 2.0 in 1992. This was a major improvement: it featured a new, object-oriented GUI, the Workplace Shell (WPS), that included a desktop and was considered by many to be OS/2's best feature. Microsoft would later imitate much of it in Windows 95. Version 2.0 also provided a full 32-bit API, offered smooth multitasking and could take advantage of the 4 gigabytes of address space provided by the Intel 80386. Still, much of the system had 16-bit code internally which required, among other things, device drivers to be 16-bit code also. This was one of the reasons for the chronic shortage of OS/2 drivers for the latest devices. Version 2.0 could also run DOS and Windows 3.0 programs, since IBM had retained the right to use the DOS and Windows code as a result of the breakup.
Read more about this topic: History Of Microsoft Windows
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