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Proliferation of clone-makers of course fueled aggressive price-competition, which in
turn helped build a staggeringly high installed-base of PC-compatible machines throughout
industry in a relatively short period of time. By 1987, the installed base of PC-compatible
machines was over 9 million - this for a platform that had only been first launched six years
earlier. The lion's share of these were clones.
The big winner, of course, was Microsoft, which supplied the operating system for each
and every machine in that massive and rapidly growing installed base. Firms like Dell and
Compaq each held significant pieces of the hardware action in the PC-compatible market-
place. But Microsoft held ALL the action as regards the operating system and - as we shall
see - much of the most relevant software as well.
On November 20, 1984, while in the midst of working jointly with IBM on the creation
of OS/2 (tied to IBM's doomed next generation PC called PS/2), Microsoft released Mi-
crosoft Windows, the firm's graphical extension for MS-DOS. Ala the Macintosh, the
Windows operating system incorporated drop-down menus, scroll bars, icons, and dialog
boxes that made programs easier to learn and use. Importantly, Windows made it possible
to switch among several programs without having to quit and restart each one. Version
1.0 shipped with several programs, including MS-DOS file management, Paint , Windows
Writer , Notepad , Calculator , and a calendar, card file, and clock to help users manage day-
to-day activities. The operating system would be constantly revised and enhanced by Mi-
crosoft through the years, and of course still remains dominant on the PC platform to this
very day.
Fifteen months after the release of Windows 1.0, Microsoft went public. The ensuing
rise in the stock created four billionaires and approx. 12,000 Microsoft employee million-
aires.
Intrigued by Microsoft's close relationship with IBM, in 1990 the Federal Trade Com-
mission began investigating Microsoft for possible collusion in the PC marketplace. Had
the regulators understood anything about PC operating systems, they might not have
bothered. At the same time that the investigation was launched, Microsoft engineers were
at work on a 32-bit OS, Microsoft Windows NT, which used ideas from OS/2 but improved
on them and was meant to help short-circuit IBM's ambitions for both OS/2 and the PS/
2. Windows NT shipped on July 21, 1993. Incorporating a new modular kernel and the el-
egant Win32 application programming interface (API), the operating system greatly sim-
plified porting from 16-bit (MS-DOS-based) Windows to more powerful machines. In the
midst of this, IBM's ambitions for both OS/2 and the PS/2 computer quickly collapsed, and
Microsoft became ever more dominant in the operating system space.
At the same time, key Microsoft applications products - most notably Microsoft Word
and Microsoft Excel (the latter for spreadsheeting) - remained market-leaders on both the
PC and Macintosh platforms, circumventing apps such as WordStar, WordPerfect and
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