The Road to MS-DOS 2 - by Nemanja Trifunovic

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The Road to MS-DOS 2<br>One little step toward UNIX

Nemanja Trifunovic<br>Aug 08, 2026

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MS-DOS was an unwanted child. Tim Paterson developed its predecessor 86-DOS only because he urgently needed some kind of operating system for the 8086-based CPU board his employer Seattle Computer Products (SCP) had already released. He really wanted to create a “proper” multitasking system, and knew how to do it, having developed something similar for the Z80 as a school project1. However, the system was needed quickly, so he and his boss agreed to start with something “quick and dirty” that would resemble Digital Research’s CP/M - a minimal operating system developed in 1974 for Intel 8080 based computers with very little memory.<br>Microsoft’s founders Paul Allen and Bill Gates were also getting ready for 16-bit microprocessors. Unsurprisingly, they decided to bet on a system popular on 16-bit minicomputers: UNIX, developed by AT&T’s Bell Labs in the early 1970s and freely distributed to universities. In February 1980, Microsoft licensed UNIX V7 source code from Western Electric (AT&T’s manufacturing arm). The name was not licensed, so on August 25, 1980, Microsoft announced its own UNIX-based product named XENIX.<br>Initially, Allen and Gates had a lot of confidence that the portability and flexibility of UNIX would make XENIX the standard operating system on 16-bit microcomputers. Once they actually had the UNIX source code, it turned out it was a poor fit for the current generation of microprocessors, especially the Intel 8086. Worse, it was a memory hog; it grew a lot since Ken Thompson developed the first version in 1969 on a PDP-7 minicomputer. Soon, Microsoft made an arrangement with SCO, a small company specialized in UNIX consulting, to take over most of the work on porting XENIX to target platforms.<br>When IBM revealed its plan to develop an Intel 8088 based personal computer that would start with only 16 KB of RAM, it was obvious that there was no way XENIX could be squeezed into such a constrained environment. Like it or not, IBM needed something like CP/M, and after an unsuccessful attempt to license it from Digital Research, they went back to Microsoft, which in turn acquired 86-DOS from SCP. The operating system was adjusted for the IBM PC, somewhat polished, renamed PC-DOS and shipped in August 1981. Microsoft retained the rights to sell it to other customers under the name MS-DOS.<br>Yet, there was a nagging feeling that a single-tasking CP/M clone was inadequate for the new generation of personal computers. Digital Research released multi-user, multitasking MP/M-86 in September 1981 and announced the single‑user multitasking Concurrent CP/M in early 1982. In response, Microsoft came up with a plan for tiered approach to its operating systems: single-user/single-tasking MS-DOS at the bottom; multi-user/multitasking XENIX at the top; and in the middle, something called XEDOS: a single-user version of XENIX. This “pyramid of upward-compatible operating systems” was announced in a Byte Magazine editorial in January 1982.<br>XEDOS was apparently more than a marketing ploy; Microsoft and SCO had tried to remove features from XENIX until it could be usable on the PCs of the era, but with little success. In his 2011 book Idea Man, Paul Allen wrote: “Even a scaled-down version of Unix was too demanding for the 8086 chip”.<br>In the July 1982 edition of Byte, the second part of an article comparing MS-DOS and CP/M-86 analyzed, among other aspects, the future prospects of the two leading 16-bit operating systems. For CP/M-86, the path was obvious - the next generation Concurrent CP/M-86 had been introduced at the West Coast Computer Faire in March. As for Microsoft, its representatives talked about MS-DOS 2.0 without mentioning XEDOS. It was clear the plan was to extend MS-DOS with new features and “a number of Xenix-derived utilities” rather than scale down XENIX. The upward path from MS-DOS to XENIX was not clear.<br>The change in plans happened sometime in early 1982, after IBM requested a new version of DOS to ship with its upcoming IBM PC XT model. The XT was a modest incremental improvement over the original PC, and IBM clearly communicated that it expected MS-DOS 2.0 to have similarly restricted scope: supporting the new built-in hard disk was all they really wanted. Keeping the operating system small was much more important to IBM than adding new features. Bill Gates was happy to oblige, but Paul Allen would have none of it: after consulting with lead DOS developers Mark Zbikowski and Aaron Reynolds, Allen became convinced that DOS needed a clean rewrite to support features he felt were essential to keep MS‑DOS relevant.<br>The first and most important feature was extending the FAT file system to better support hard disks. Allen wanted to replace the flat file system with a hierarchical structure, similar to UNIX, with a root...