Technology

To put things into context, IBM didn’t get ripped off in any way (at least not from DOS - the whole IBM/Microsoft OS/2 debacle is a different story). The earliest PCs (IBM PC, IBM PC XT, IBM PC Jr., and associated clones) didn’t really have the hardware capabilities needed to permit a more advanced operating system. There was no flat memory model, no protection rings, and no Translation Look-aside Buffer (TLB). The low maximum unpaged memory addressing limit (1MB) made it difficult to run more than one process at a time, and really limits how much OS you can have active on the machine (modern Windows by way of example reserves 1GB of virtual RAM per process just for kernel memory mapping).

These things did exist on mainframe and mini computers of the day — so the ideas and techniques weren’t unknown — but the cheaper IBM PCs had so many limitations that those techniques were mostly detrimental (there were some pre-emptive OSs for 8086/8088 based PCs, but they had a lot of limitations, particularly around memory management and protection), if not outright impossible. Hence the popularity of DOS in its day — it was simple, cheap, didn’t require a lot of resources, and mostly stayed out of the way of application development. It worked reasonably well given the limitations of the platforms it ran on, and the expectations of users.

So IBM did just fine from that deal — it was when they went in with Microsoft to replace DOS with a new OS that did feature pre-emptive multitasking, memory protection, and other modern techniques that they got royally screwed over by Microsoft (vis: the history of OS/2 development).