Watch Triumph of the Nerds Season 1 Episode 2 Online

Compaq's successful reverse-engineering of the IBM PC, which led to many competitors producing IBM-clones that undercut IBM's own offering. While IBM was one of the key companies that fostered the growth of the PC industry and initially dominated it, by 1990 it had lost its lead. IBM's unsuccessful attempt to recapture a dominate share in the PC market with the PS/2 and OS/2, the latter being the successor to MS-DOS. The proprietary nature of the PS/2 and exclusivity of OS/2 was intended to drive sales of IBM's own hardware and made it difficult for other manufacturers of PC compatibles to compete. Microsoft had originally profited from the initial success of the IBM PC. It did even better with the proliferation of clones as IBM's own market share shrunk, so Microsoft saw no business sense in following IBM's lead. Microsoft saw more potential in developing Windows, a project they pursued parallel to their cooperating with IBM on OS/2, and Windows 3.0 proved to be a great success (along with MS-DOS) bundled with new PCs. This led to the split between the two titans, with Microsoft setting the standard for PCs, while IBM concentrated on its mainframe and services businesses.