In 1988, as I wandered around the floor of Comdex, the computer industry’s vast annual trade show, I could feel the anxiety among the participants. Since the birth of the IBM PC, six years earlier, Microsoft’s Disk Operating System (DOS) had been the de facto standard for PCs. But DOS was now starting to age. Everyone wanted to know what would replace it.

Apple Computer, at the peak of its powers, had one of the largest booths, showcasing the brilliantly graphical Macintosh operating system, which made DOS look antique. Meanwhile, two different alliances of major companies, including AT&T, Hewlett-Packard, and Sun Microsystems, offered graphical versions of the UNIX operating system. And IBM, determined not to let Microsoft overtake it again, was touting its new OS/2, an operating system said to combine DOS compatibility with the power of UNIX and the Mac’s ease of use.

Amid the uncertainty, there was something very curious about the Microsoft booth, which was hardly the show’s largest. Despite the success of the company, almost all of its competitors were much bigger. But while most booths focused on a single blockbuster technology, Microsoft’s resembled a Middle Eastern bazaar. In one corner, the company was previewing...