MS-DOS 1.0: Released as PC-DOS with IBM PCs (source)
On August 12, 1981, IBM introduced its new personal computer, the IBM 5150 PC. It featured a 4.77-MHz Intel 8088 CPU, 64KB RAM, 40KB ROM, one 5.25-inch floppy drive, and PC-DOS 1.0 (Microsoft’s MS-DOS).
Next year, Microsoft released MS-DOS 1.25, the first edition of its OS that ran on non-IBM machines. Throughout the 1980s Microsoft continued to iterate DOS, even though Windows, which featured a GUI (Graphical User Interface), was released in 1985. Initial versions of Windows were designed as add-ons that could be launched from DOS.
In 1983, MS-DOS 2.0 was released. It was virtually rewritten from scratch and added features like directories (a tree-structured file system) and support for 360 KB floppy disks. The following year saw the introduction of MS DOS 3.0 and MS DOS 3.1, which boasted of support for 1.2 MB floppy disks, bigger (than 10 MB) hard disks, and networking. 3.5-inch 720 KB floppy disk drive support arrived in 1986 with MS DOS 3.2.
MS-DOS 4.0 introduced in 1988 was a major step forward in many ways, but it also turned out to be bit of a disaster. It introduced DOS Shell, and support for a graphical interface. Unfortunately, it was also horrendously buggy.
Throughout the decade Microsoft faced competition from Digital Research’s DOS Plus, and later from DR-DOS. Microsoft also collaborated with IBM to develop OS/2, which was seen as a successor of DOS. However, emboldened by the increasing popularity of Windows, Microsoft decided to stop backing OS/2, and released Windows 3.0 in 1990. In the same year, Microsoft became the first software company to reach $1 billion in annual sales. Before that, in 1986, Microsoft took complete ownership of DOS from Seattle Computer Products through a legal settlement of $925,000.
In 1991, MS-DOS 5.0 was released along with the extremely popular QBASIC. MS-DOS 6.0 was released in March 1993, and was criticized due to its controversial DoubleSpace disk compression feature that was copied from Stacker. This feature was dropped next year in MS-DOS 6.21 due to a lawsuit from Stacker.
In 1994, Microsoft announced that it would stop selling DOS separately in preparation for the launch of Windows 95, which would become the first standalone Windows OS. Although Microsoft stopped selling DOS, it continued to live on as Command Prompt within Windows. With both Windows 95 and 98 it was even possible to invoke DOS mode without booting into Windows. MS-DOS 8, which was introduced in Windows ME, and continues to be shipped with Windows till date, was the final version of MS-DOS.