VGA and MCGA
In many ways, the PS/2 line is most notable, historically, for its introduction of the Video Graphics Array standard.
Among its many modes, VGA could display 640-by-480-pixel resolution with 16 colors on screen, and a resolution of 320 by 200 pixels with 256 colors, which was a significant improvement for PC-compatible systems at the time. It was also fully backward-compatible with the earlier Enhanced Graphics Adapter and Color Graphics Adapter standards from IBM.
In addition, the PS/2 line introduced what we now colloquially call a "VGA connector"--a 20-pin D-type socket that also became an industry standard.
The low-end Model 30 shipped with an integrated MCGA graphics adapter that could display a resolution of 320 by 200 pixels with 256 colors as well, but could display only 640 by 480 pixels in monochrome and was not backward-compatible with EGA. MCGA met its end after IBM included it in only a few low-end versions of the PS/2; cloners never favored it.
Micro Channel Architecture
The crowning glory of the PS/2 line's hardware improvements was supposed to be its new expansion bus, dubbed Micro Channel Architecture. Every initial PS/2 model except the low-end Model 30 shipped with internal MCA slots for use with expansion cards.
The Model 30 included three ISA expansion slots--the type used in the original IBM PC and extended for the PC AT line. Not surprisingly, the rest of the PC-compatible industry utilized the ISA expansion bus as well, so any PC-compatible machine could use almost all the cards created for other PC compatibles.
With the PS/2, IBM saw the opportunity to create an entirely new and improved expansion bus whose design it would strictly control and license, thus limiting the industry's ability to clone the PS/2 machines without paying a toll to IBM.
ISA had become slow and limiting by mid-1980s standards. MCA improved on it by increasing the data width from 16 bits to either 16 bits or 32 bits (which allowed more data to transmit over the bus at a time) and by improving the bus speed from 8MHz to 10MHz.
MCA also introduced a limited form of plug-and-play functionality, wherein each expansion card carried with it a unique 16-bit ID number that a PS/2 machine could identify to help it automatically configure the card.
In theory, that method sounded much easier than the jumper-setting necessary on earlier ISA cards; but in practice, it turned a bit unwieldy. Older IBM Reference Disks (the utilities that set the system's basic CMOS settings) would not know the IDs for newer cards, which required IBM to release frequent Reference Disk updates. So unless you always had the latest version (which was impossible in the pre-Internet-update era), you probably needed a specially designed disk to use your new MCA expansion card.
The PC clone industry did not take kindly to the power play represented by IBM's new MCA bus. Just one year after its introduction, a consortium of nine PC clone manufacturers introduced its own rival standard, EISA, which extended the earlier ISA bus to 32 bits with minimal licensing cost. Ultimately, few desktop PCs utilized EISA. The standard remained 16-bit ISA slots until Intel's introduction of PCI, yet another new bus standard, in the early 1990s.
MCA did not help the PS/2's fortunes, but another major factor worked to sink the PS/2 as a successful platform.
As previously mentioned, IBM planned to release the PS/2 with a completely new, proprietary operating system called OS/2, which would take advantage of new features of the 386 CPU in the high-end Model 80, utilize the built-in mouse port, and also provide a graphical windowing environment comparable to that of the Apple Macintosh.
There was only one problem: IBM hired Microsoft, creator of PC-DOS (and MS-DOS and Windows), to make it.
At the time, Microsoft was enjoying a boom in business from all the MS-DOS licenses it was selling to PC clone vendors, and a proprietary PC OS was most definitely not in its best interest.
So, when IBM announced that the full version of OS/2 would be delayed until late 1988 (with a simple DOS-like preview version coming in late 1987), more than a few conspiracy theories flew around the industry.
Meanwhile, Microsoft was prepping a launch of Windows 2.0, which would have most of the features of OS/2, in late 1987--over a year before IBM would launch OS/2. The situation was a painful lesson in letting your competitor create products for you. Amazingly, IBM did not recognize (and act against) that potential conflict of interest.
The End of IBM's PC Dominance
After launch, the IBM PS/2 line sold well for a short time (about 1.5 million units sold by January 1988), but its comparatively high cost versus PC-compatible brands steered most consumer-level users away from the systems.
Even worse for IBM, just about every advance it made in the PS/2 ended up being matched (or cloned) and then surpassed by the clone vendors. Sales of the PS/2 slipped dramatically through the rest of the 1980s, and the PS/2 line became an embarrassing public disaster for IBM.
By 1990, it was abundantly clear that IBM no longer guided the PC-compatible market. And in 1994, Compaq replaced IBM as the number one PC vendor in the United States.
IBM stuck with the PC market until 2004, when it sold its PC division to Lenovo. By that time IBM had scored a few more consumer PC innovations with graphics standards and portable computers (especially with the ThinkPad line), but none of its machines after the PS/2 would have the same impact as those it released in the early and mid-1980s.