Presentation Manager was codenamed Winthorn and developed primarily at the IBM Hursley Labs in UK (with substantial input from Redmond). It was a cross between Microsoft Windows and IBM's mainframe graphical system (GDDM). Like Windows, it was message based and many of the messages were even identical. But there was a number of significant differences as well.
The most significant difference was the coordinate system. While in Windows the 0,0 coordinate was located in the upper left corner, in PM it was in the lower left corner. Another difference was that all drawing operations went to the Device Context (DC) in Windows. PM also used DCs but there was an added level of abstraction called Presentation Space (PS). OS/2 also had more powerful drawing functions in its Graphics Programming Interface (GPI). Some of the GPI concepts (like viewing transforms) were later incorporated into Windows NT. The OS/2 programming model was thought to be cleaner, since there was no need to explicitly export the window procedure, no WinMain, no nonstandard function prologs and epilogs.
In 1990, version 3.0 of Windows was really beginning to sell, and Microsoft began to lose interest in OS/2, especially since even earlier, market interest in OS/2 was always much smaller than in Windows.
The companies parted ways, and IBM took over all of subsequent development. Microsoft took with it OS/2 3.0, which it renamed Windows NT; as such, it inherited certain characteristics of PM, however keeping an almost strict source code compatibility with Windows. IBM continued to develop PM. In subsequent versions of OS/2, it was used as a base for the object-oriented interface Workplace Shell, a precursor of Windows' Explorer. In latest versions, IBM has commissioned Scitech Software with writing the graphic drivers for the majority of the cards that don't support OS/2 officially. There is a great integration of the graphic layer in the system, but it is still possible to run certain parts of OS/2 from a text-console or X window.
An important problem was that of the single input queue: a failing application could block the processing of user-interface messages, thus freezing the graphical interface. This problem has been solved in Windows NT, where such an application would just become a dead rectangle on the screen; in later versions it became possible to move or hide it. In OS/2 it was solved in a FixPack, using a timer to determine when an application was not responding to events.