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While Xenix 2.0 was still based on Version 7 Unix,<ref>{{cite book |title=SCO Unix in a Nutshell |url=https://archive.org/details/scounixinnutshel00elli |url-access=registration |date=1994 |publisher=[[O'Reilly Media, Inc.]] |isbn=978-1-56592-037-8 |pages=[https://archive.org/details/scounixinnutshel00elli/page/312 312]–}}</ref> version 3.0 was upgraded to a [[Unix System III]] code base,<ref name="dir83"/>{{rp|9}}<ref name="Frisch2002">{{cite book |author-first=Æleen |author-last=Frisch |title=Essential System Administration: Tools and Techniques for Linux and Unix Administration |url=https://archive.org/details/essentialsystema00fris_0 |url-access=registration |date=2002 |publisher=[[O'Reilly Media, Inc.]] |isbn=978-0-596-55049-3 |page=xiii}}</ref><ref name="KentWilliams1990">{{cite book |author-first1=Allen |author-last1=Kent |author-link1=Allen Kent |author-first2=James G. |author-last2=Williams |title=Encyclopedia of Computer Science and Technology |volume=22 - Supplement 7 |chapter=Artificial Intelligence to Vector SPate Model in Information Retrieval |chapter-url=https://books.google.com/books?id=L7NOABDqaMcC&pg=PA404 |date=May 15, 1990 |publisher=[[CRC Press]] |isbn=978-0-8247-2272-2 |pages=404–}}</ref> a 1984 Intel manual for Xenix 286 noted that the Xenix kernel had about 10,000 lines at this time.<ref name="intel"/>{{rp|1–7}} It was followed by a [[Unix System V|System V R2]] codebase in Xenix 5.0 (a.k.a. Xenix System V).<ref name="Lapin1987">{{cite book |author-first=Juraj E. |author-last=Lapin |title=Portable C and Unix System Programming |date=1987 |publisher=[[Pearson Education]] |isbn=978-0-13-686494-3 |page=106 |quote=The Xenix 2.3 version generally resembles V7's [ABI]; the Xenix 3.0 version resembles SIII's, and the Xenix 5.0 version resembles SV2's.}}</ref>
"Microsoft hopes that Xenix will become the preferred choice for software production and exchange", the company stated in 1981.<ref name="greenberg198106">{{Cite magazine |author-last=Greenberg |author-first=Robert B. |date=June 1981 |title=The Unix Operating System and the Xenix Standard Operating Environment |url=https://archive.org/stream/byte-magazine-1981-06/1981_06_BYTE_06-06_Operating_Systems#page/n249/mode/2up |magazine=[[Byte (magazine)|Byte]] |pages=248–264}}</ref> Microsoft referred to its own [[MS-DOS]] as its "single-user, single-tasking operating system",<ref name="byte198207">{{cite news |url=https://archive.org/stream/byte-magazine-1982-07/1982_07_BYTE_07-07_Computers_in_the_Arts_and_Sciences#page/n321/mode/2up |title=Upward Migration / Part 2: A Comparison of CP/M-86 and MS-DOS |newspaper=[[BYTE]] |date=July 1982 |access-date=23 March 2016 |author-last1=Taylor |author-first1=Roger |author-last2=Lemmons |author-first2=Phil |pages=330}}</ref> and advised customers that wanted [[multiuser]] or [[Computer multitasking|multitasking]] support to buy Xenix.<ref name="byte198207"/><ref name="swaine19820823">{{cite news |url=https://books.google.com/books?id=VDAEAAAAMBAJ&pg=PA24 |title=MS-DOS: examining IBM PC's disk-operating system |newspaper=[[InfoWorld]] |date=August 23, 1982 |access-date=January 29, 2015 |author-last=Swaine |author-first=Michael |author-link=Michael Swaine (technical author) |pages=24}}</ref> It planned to over time improve MS-DOS so it would be almost indistinguishable from single-user Xenix, or '''XEDOS''', which would also run on the 68000, Z8000, and LSI-11; they would be [[upward compatible|upwardly compatible]] with Xenix, which ''[[Byte (magazine)|Byte]]'' in 1983 described as "the multi-user MS-DOS of the future".<ref name="morgan198201">{{cite news |url=https://archive.org/stream/byte-magazine-1982-01/1982_01_BYTE_07-01_The_IBM_Personal_Computer#page/n7/mode/2up |title=Of IBM, Operating Systems, and Rosetta Stones |newspaper=[[Byte (magazine)|Byte]] |date=January 1982 |access-date=October 19, 2013 |author-last=Morgan |author-first=Chris |page=6}}</ref><ref name="fiedler198310">{{cite news |url=https://archive.org/stream/byte-magazine-1983-10/1983_10_BYTE_08-10_UNIX#page/n133/mode/2up |title=The Unix Tutorial / Part 3: Unix in the Microcomputer Marketplace |newspaper=[[BYTE]] |date=October 1983 |access-date=January 30, 2015 |author-last=Fiedler |author-first=Ryan |pages=132}}</ref> Microsoft's Chris Larson described MS-DOS 2.0's Xenix compatibility as "the second most important feature".<ref name="larson198311">{{cite news |url=https://archive.org/stream/byte-magazine-1983-11/1983_11_BYTE_08-11_Inside_the_IBM_PC#page/n291/mode/2up |title=MS-DOS 2.0: An Enhanced 16-Bit Operating System |newspaper=[[BYTE]] |date=November 1983 |access-date=19 March 2016 |author-last=Larson |author-first=Chris |pages=285}}</ref> His company advertised DOS and Xenix together,
After the [[breakup of the Bell System]] in 1982, AT&T started selling System V.<ref name="shea19840220">{{cite news |url=https://books.google.com/books?id=hS4EAAAAMBAJ&pg=PA43 |title=New developments may decide battle over Unix |newspaper=[[InfoWorld]] |date=1984-02-20 |access-date=25 February 2016 |author-last=Shea |author-first=Tom |pages=43–45}}</ref> Microsoft, believing that it could not compete with Unix's developer, decided to abandon Xenix. The decision was not immediately transparent, which led to the term [[vaporware]].<ref name="NYT">{{cite journal |ref=refFlynn |author-first=Laurie |author-last=Flynn |date=24 April 1995 |title=The Executive Computer |journal=[[The New York Times]] |issn=0362-4331 |url=https://www.nytimes.com/1995/04/24/business/information-technology-the-executive-computer.html?scp=5&sq=vaporware&st=cse |access-date=2010-04-14}}</ref> It agreed with [[IBM]] to develop [[OS/2]],<ref name="letwin19950817">{{cite newsgroup |newsgroup=comp.os.ms-windows.misc|url=https://groups.google.com/forum/?hl=en#!original/comp.os.ms-windows.misc/-iNeep60eVE/Xl5ddAtJENcJ |title=What's happening to OS/2 |date=August 17, 1995 |access-date=November 6, 2013 |author-last=Letwin |author-first=Gordon |message-id=DDFvKo.G4M@lab.lwpi.com}}</ref> and the Xenix team (together with the best MS-DOS developers){{citation needed|date=August 2019}} was assigned to that project. In 1987, Microsoft transferred ownership of Xenix to SCO in an agreement that left Microsoft owning slightly less than 20% of SCO (this amount prevented both companies from having to disclose the exact amount in the event of an SCO IPO). And SCO would acquire both of the other companies that had Xenix rights,<ref name="doug-video"/> Logica's software products group in 1986 and HCR in 1990.<ref>{{cite news | url=https://books.google.com/books?id=gjwEAAAAMBAJ&pg=PA33 | title=Santa Cruz Operation Ltd. to Offer Source for Xenix | magazine=InfoWorld | date=December 8, 1986 | page=33}}</ref><ref>{{cite news | url=https://www.newspapers.com/image/463861965/?terms=hcr%2B%22santa%2Bcruz%2Boperation%22 | title=California firm acquires Unix-systems leader | agency=Canadian Press | newspaper=The Ottawa Citizen | date=May 10, 1990 | page=H8 | via=Newspapers.com}}</ref> When Microsoft eventually lost interest{{clarify|date=August 2019}} in OS/2 as well, the company based its further high-end strategy on [[Windows NT]].
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