What time frame is this? Windows 3.0 (and up through 9x) is supposed to have supported protected mode when programs were coded to make use of it.[1] Or maybe you're referring to what that article calls Virtual 8086 mode. That seems to have been supported in the 386, with "protected mode" supported all the way back in the 286. I dunno, you seem more knowledgeable about the specifics of this than me.

> The Intel guys offered not only to fully fund the development, but to fully staff it and pay Microsoft for all the bother.

In a world where increasing software complexity or having outsiders contribute a sizable or complex piece of code to your private codebase has no cost in future development complexity or runtime, this might have been purely an upside. In the real world, there's there are other considerations, which is likely why it was rejected. Otherwise, why would anyone turn down free development time? Are we to assume Gates was so capricious as to turn down something this beneficial, or that he had resons we haven't adequately covered yet?

> If someone wants to philosophically believe in rational markets and insightful and honest executives, well, that is a choice they can make.

I don't believe in entirely rational markets and honest and insightful executives, but I do believe in people following what they think that market will do, and in executives that turn down things they think are a bad idea, right or wrong. I'm willing to bet Gates had a lot more information than we do when making this decision, and had his reasons. I think it's possible that he could have been right.

1: https://en.wikipedia.org/wiki/Protected_mode#Operating_syste...

Well to talk about this more would take the conversation in a completely different direction. Bill met with Steve Jobs and they divided the market by including and removing technical features. Similarly, they met with the various workstation vendors and mini vendors and agreed to add or remove features to create "effective monopolies" based on product differentiation. It can't be proven in a court of law, and it was agreements between top executives who would cancel or undermine internal development projects. Like networking, office software, hardware included -- the decision to support types of programs was negotiated. I worked for direct reports of three of the executives involved at different times (SCO, Steve, Bill) and heard the same stories - as projects were cancelled or competitors products were purchased/killed in exchanges which often also involved offshore transfers between "competing" executives. I'm always hesitant to say these things on HN, since people here always insist on proof - when those involved went far out of their way to insure that no proof exists.