So much of the software history of the Personal Computer has been dictated by hardware advancements, not least the Operating System. One such advance was Operating System/2, jointly developed by Microsoft and IBM, making its debut on the PC market in 1987, and, despite some major obstacles being thrown into its path from several directions (not least from one of its creators), has stubbornly stuck around to this day.
One such hardware development which DOS could hardly take advantage of was Intel's new 80286 Central Processing Unit, which introduced a new concept called 'Protected Mode', which allowed it to access a full 16Mb of RAM (for some perspective, it's predecessors, the 8086 and 8088 could access 1Mb, and more commonly worked in 640kb, since this was obviously enough for anyone! (No, we will NEVER forgive 'him' for that comment).
The lack of Memory Protection within the MS-DOS environment meant that any application could use the memory directly as it seen fit, thus making the system a tad unstable if a program was coded incorrectly. 286 Protected Mode overcame this by literally protection portions of the memory, for example, keeping the system 'core' loaded into RAM safe from corruption from a rouge app. Of course, 286 Protected Mode needs an Operating System which supports it; DOS operated only in '86 'Real Mode', offering no memory protection and no pre-emptive multi-tasking.
Microsoft had realised the extreme problems with the DOS environment pretty early on, and as early as 1983, set about extending the functionality of the DOS based PC through it's graphical user interface, Windows. Microsoft Windows version 1, which appeared in 1985, offered multi-tasking of MS-DOS applications (see the OS history on Windows 1.x for more information), but was in no way the solution to the problems inherent with DOS. Microsoft realised this and started a rewrite of DOS.
In a project starting as early as 1983, Microsoft began work on MS-DOS 3, a multitasking version of DOS (it was known as DOS 3 as the Real Mode DOS 2 was currently shipping). When the 'real' mode DOS 3 shipped, the project changed name to DOS 4. By 1987, in the text, 'Exploiting MS-DOS', the project was the subject of heavy speculation, with one possible name being banded around was 286-DOS, with Microsoft promising full, pre-emptive multi-tasking and full network support, and have Xenix support. However, by this time, IBM and Microsoft had already signed their Joint Development Agreement; the infant steps in OS/2's birth were taken. OS/2 version 1.0 was released in December 1987, coinciding with the launch of IBM's PS/2 Computer.
In development, many commentators, such as those in 'Exploiting MS-DOS' considered OS/2 to be merely a new version of DOS, and upon release, a superficial view would not have made this view look entirely out of the ordinary. Most of the system commands present in MS-DOS are also present in OS/2 version 1.0, such as DIR, CD, COPY, MKDIR, etc.. were all implemented to make DOS users feel at home. Another quirk of fate which made OS/2 even more DOS like was the lack of the planned Graphical User Interface with OS/2, 'Winthorn', which would later become the OS/2 Presentation Manager, a truly object orientated interface for the PC which in many ways was ahead of it's time. One of the many ways in which it was ahead of its time was the fact that Windows version 2.x looked a LOT like Winthorn. (See the screenshots in the Windows 2.x History).
Under the hood however, OS/2 was a very different beast from DOS. The new OS boasted Pre-emptive multi tasking, multithreading, full protected mode, virtual memory and Dynamic Linking Libraries. Many of these features did not fully make their way into the Windows world until NT was released in 1993, but, even at that, OS/2 had a great advantage that NT has never been able to match; DOS support.
Since MS-DOS was immensely popular, OS/2 simply had to support DOS applications for it have any chance of gaining popularity with the end user. IBM's novel response was to switch the CPU from protected mode to real mode in order to execute DOS programs in a full screen session, while still running OS/2 programs in background. This was achieved using the new Program Selector, which allowed up to 12 DOS or OS/2 sessions to be run simultaneously.
For the end user, this was a major departure from what had gone before, despite the fact that the interface was text only. The ability to run true multi-tasking on a 286 PC with 2Mb RAM was truly groundbreaking.
Despite this, OS/2 had major problems that the end user did not take to. The (in)famous IBM Boot Manager, which made it difficult for DOS users who wanted to keep their current setup. Version 1.1 included a Dual Boot module for this purpose, but the ubiquitous Boot Manager, which is still, I believe, used in the magnificent Partition Magic tool, was first seen in version 2.0. Moreover, the power user took exception to the fact that that there was no option to bypass the config.sys settings. This meant that, for example, installation of a device driver that causes the system to fail at boot means start up from a floppy (slow) and rectify the error from the floppy based system.
The resources required by OS/2 were also prohibitive. 2Mb of RAM was seen as awful for a minimum. Although DOS compatibility was a necessity in OS/2, it was, unsurprisingly, a bit performance hitter. The DOS box in OS/2 earned the nickname, 'the Penalty Box', for this poor performance. Even with the performance whack, DOS support was relatively good in OS/2, the fact that it was genuine 'Real Mode' DOS meant that OS/2 could run most previous DOS applications, not just the 'well behaved' ones that Windows NT based OSes and Windows ME run. The DOS support, like most features in OS/2 greatly improved in later releases, and so good that IBM claimed that version 2 was a 'better Windows than Windows, and a better DOS than DOS', and to a certain extent OS/2's memory protection meant it was a better DOS than DOS.
In reflection, OS/2 version 1.0 was a great breakthrough in Personal Computer Operating Systems, introducing some ground breaking and innovative features, some almost 10 years ahead of their time in terms of general use.