In 1985, Intel finally released its follow-on to the 286, the 80386. And the 386 solved all of the 286's technical problems.
Beyond being able to switch back and forth between protected and real modes without rebooting, the 386 also added a new "virtual 8086 mode," in which software that could only run in real mode could be run inside a little sandbox that, to the code, looked just like an 8086 in real mode. Now all your old DOS programs could run right alongside your shiny new OS/2 or Windows ones.
The 386 was exactly what programmers and users wanted. (Which is why, even today, lots of software is compiled to use the 386 as its baseline platform. Every CPU that Intel released afterwards is, effectively, a 386+.)
But there was one problem the 386 couldn't solve, because it wasn't a technical problem. That problem was IBM.
IBM had bet BIG on the 286. To sell the 286-based PC/AT, it had promised its customers that the 286 was the future of the PC. And these were customers who were used to IBM standing by its promises not just for years, but for DECADES.
There were Fortune 500 corporations which had built their entire computing infrastructure around the AT. They did that because IBM had promised them that the AT was their ticket into the future, into the world where PCs could multitask like a UNIX workstation.
But it wasn't, and the release of the 386 underlined that. Developers rushed to write software for the 386, because it offered all the 286's benefits (and more!) without the 286's dumb limitations. And that was all software that IBM's customers couldn't run, because they were saddled with their 286-based ATs.
This meant that IBM was, effectively, lashed to the mast of the 286. They couldn't just let it go and move on to the obviously better 386 the way the clone makers could, because if they did, their customers would revolt. They had to live with the 286.
In 1987, IBM released its successor to the PC/AT, the PS/2. PS/2 models were released in a range of form factors. If you wanted a server, or a gigantic tower that cost $8,000 in 1987 dollars (more than $21,000, in today's money), you could get a PS/2 with a 386 in it.
But if you just wanted a desktop workstation? The best PS/2 you could get came with a 286.
But there was one problem the 386 couldn't solve, because it wasn't a technical problem. That problem was IBM.
IBM had bet BIG on the 286. To sell the 286-based PC/AT, it had promised its customers that the 286 was the future of the PC. And these were customers who were used to IBM standing by its promises not just for years, but for DECADES.