Digital Research fought a long losing battle to promote CP/M-86, and eventually decided that they could not beat the Microsoft-IBM lead in application software availability, so they had best join it by modifying CP/M-86 to allow it to run the same applications as MS-DOS and PC-DOS. The new version was re-launched in 1988 as DR-DOS.
As well as being cheaper than MS-DOS, DR-DOS offered improved features, such as better memory management, file system compression, and (later) a GEM based GUI file management shell known as ViewMAX. It also included an API for multitasking on CPU's capable of memory protection, namely the Intel 80386 and newer. The API was available only to DR-DOS aware applications, but the system also included a simple task-switcher (TaskMax) that allowed "unaware" DOS applications to be flipped between, suspended while in the background.
To match with MS-DOS version numbers, the first version was known as 3.31 and released in May 1988. DRI was approached by a number of PC manufacturers who were interested in a 3rd party DOS, and this prompted several updates to the system; 5.0 in May 1990 which introduced ViewMAX, and 6.0 in 1991.
Suddenly faced with real competition in the DOS arena for the first time, Microsoft started an aggressive campaign to downplay the product. They immediately announced the development of MS-DOS 5.0 in May 1990, to be released a few months later and include all the advanced features of DR-DOS. This turned out to be a famous case of FUD, as MS-DOS 5.0 was actually not released until June 1991 and included only a few of the features.
Though DR-DOS was almost 100% binary compatible with applications written for MS-DOS, Microsoft nevertheless expended considerable efforts in attempts to break compatibility. In one example they inserted code into Windows 3.0 to throw up a non-fatal error message if it detected a non-Microsoft DOS. With the detection code disabled (or if the user canceled the error message), Windows ran perfectly under DR-DOS. (see also Embrace, extend and extinguish for other Microsoft tactics.)
In the fall of 1991 Microsoft announced Windows 3.1, complete with modifications to ensure that it would not run on the then-new DR-DOS 6.0. (They had also refused to allow DR access to the beta of 3.1.) It was a simple matter for Digital Research to patch DR-DOS to circumvent the modifications and the patched version was on the streets within six weeks of the release of Windows 3.1. With improved marketing and packaging, very advanced memory management (second only to the third-party add-on product QEMM), free bundled SuperStore disk compression and Super PC-Kwik caching software, DR-DOS 6.0 was outstanding value and easily the most successful version.
Around this time, networking giant Novell bought out Digital Research with a view to using DR's product line as a lever in their comprehensive strategy to break the Microsoft monopoly. (This was part of a massive and ultimately disastrous spending spree for Novell: they bought WordPerfect Corporation at about the same time, part of Borland and invested heavily in Unix as well.) The planned DR-DOS 7.0, intended to trump Microsoft's troubled MS-DOS 6.0, was delayed, and delayed again. When it eventually arrived renamed to Novell DOS 7.0, it proved to be bloated, slow and buggy. Realising eventually that their formidable networking skills did not translate into other areas, Novell sold the product line off to Caldera Systems, by which time it was of little commercial value.
Although DR-DOS had ceased to be a significant present threat to their market share by 1995, Microsoft now faced growing competition from IBM's PC-DOS 6.3, and moved to make it impossible to use or buy the subsequent Windows version, Windows 95, with any other DOS product bar their own. Claimed by them to be a purely technical change, this was later to be the subject of a major law suit brought in Salt Lake City by Caldera. Microsoft lawyers tried repeatedly to have the case thrown out but without success. Immediately after the completion of the pre-trial deposition stage (where the parties list the evidence they intend to present), there was an out-of-court settlement for an undisclosed but massive sum. DR-DOS was eventually sold on to Lineo, where it is still manufactured for some specialised applications. One of those applications is used by Seagate. If your run the current version(s) of Seagate's Seatools, it boots into a version of DR-DOS.