Rumors about incompatibilities spread because people preferred to rationalize what they were already doing, and there was a lot of money in tuning and fixing messed-up Windows systems that would have dried up.
And that dog box could only run MS-DOS and no Windows programs.
Now it is true OS/2 1.x only ran on an IBM PS/2 but when it came running Windows and DOS it was no match for Windows 3.x itself.
Now OS/2 2.0 did run Windows and DOS program much better than Windows 3.x and it ran on any machine that could run MS-DOS, but it came out after Windows 95.
OS/2 2.0 did this by using the hardware support built-in to the 80386 chip and Windows 95 used that exact same hardware support to greatly improve on Windows 3.x.
Now while OS/2 2.0 was still much better than Windows 95, the race was lost only because by the time it came out Windows 95 was a smash hit.
Also OS/2 2.0 needed a high end 80386 machine with lots of (and very expensive) RAM where as Windows 95 ran just fine on low end 80386DX chips using much less RAM.
https://arstechnica.com/information-technology/2013/11/half-...
From that page:
Unfortunately, OS/2 had a crucial flaw in its design: a Synchronous Input Queue (SIQ). What this meant was that all messages to the GUI window server went through a single tollbooth. If any OS/2 native GUI app ever stopped servicing its window messages, the entire GUI would get stuck and the system froze.
In 1996, IBM released OS/2 Warp 4, which included a revamped Workplace Shell, bundled Java and development tools, and a long-awaited fix for the Synchronous Input Queue. It wasn’t nearly enough. Sales of OS/2 dwindled while sales of Windows 95 continued to rise.
Windows 95 was a smash success, breaking all previous records for sales of operating systems.
So to clarify it was OS/2 Warp 4 that finally delivered on the promise of Windows Better than Windows, but unfortunately it just came too late.
Windows started out life as nothing more than a GUI designed to make MS-DOS look more like the Apple Macintosh.
One of Windows 3.x big strengths was it's ability to run a large number of MS-DOS programs.
But that was also it's weakness because it also meant it had to run MS-DOS and that OS was not much more than a boot loader and nothing like the modern looking operating system like OS/2.
However a big reason why OS/2 failed was because OS/2 1.x could only run a handful of MS-DOS programs and it ran them very badly.
People would use Windows 3.x ahead of OS/2 because Windows could run their MS-DOS programs.