This radical break from company tradition of in-house development was one of the key decisions that made the IBM PC an industry standard.

Microsoft, founded five years earlier by Bill Gates, was eventually selected for the operating system.

[5] IBM's expectation proved correct: one survey found that 96.3% of PCs were ordered with the $40 PC DOS compared to 3.4% with the $240 CP/M-86.

By the time PC DOS 3.0 was completed, IBM had a team of developers covering the full OS.

O'Rear often felt overwhelmed by the number of people he had to deal with at the ESD (Entry Systems Division) facility in Boca Raton, Florida.

The initial version of DOS was largely based on CP/M-80 1.x and most of its architecture, function calls and file-naming conventions were copied directly from the older OS.

Later, a group of Microsoft programmers (primarily Paul Allen, Mark Zbikowski and Aaron Reynolds)[25] began work on PC DOS 2.0.

Completely rewritten, DOS 2.0 added subdirectories and hard disk support for the new IBM XT, which debuted in March 1983.

Despite jumping a whole version number, it again proved little more than an incremental upgrade, adding nothing more substantial than support for the AT's new 1.2 megabyte (MB) floppy disks.

Planned networking capabilities in DOS 3.00 were judged too buggy to be usable and Microsoft disabled them prior to the OS's release.

In any case, IBM's original plans for the AT had been to equip it with a proper next-generation OS that would use its extended features, but this never materialized.

[2] PC DOS 3.3, released with the PS/2 line, added support for high density 3+1⁄2-inch 1.44 MB floppy disk drives, which IBM introduced in its 80286-based and higher PS/2 models.

DOS 4.0 had some compatibility issues with low-level disk utilities due to some internal data structure changes.

Aside from IBM's PC DOS, MS-DOS was the only other version available as OEM editions vanished since by this time PCs were 100% compatible so customizations for hardware differences were no longer necessary.

IBM and Microsoft parted ways—MS-DOS 6 was released in March, and PC DOS 6.1 (separately developed) followed in June.

Most of the new features from MS-DOS 6.0 appeared in PC DOS 6.1 including the new boot menu support and the new commands CHOICE, DELTREE, and MOVE.

PC DOS 7 also included many optimizations to increase performance and reduce memory usage.

[33] ThinkPad products had a copy of the latest version of PC DOS in their Rescue and Recovery partition.

[34] PC DOS 7.1 added support for Logical Block Addressing (LBA) and FAT32 partitions.

In 1986, IBM announced PC DOS support for client access to the file services defined by Distributed Data Management Architecture (DDM).

In 1988, client support for stream-oriented files and hierarchical directories was added to PC DOS when they became available on the DDM server systems.